Overview of MCC and Compact in Nepal

1
MCC IS A U.S. GOVERNMENT AGENCY THAT GIVES GRANTS TO INCREASE
ECONOMIC GROWTH AND REDUCE POVERTY
Focused mandate: Reduce poverty through economic growth
Corporate structure: Led by a governing public/private Board of Directors
• Secretary of State Mike Pompeo (chair)
• Secretary of Treasury Steven T. Mnuchin (vice chair)
• U.S. Trade Representative Robert E. Lightizer
• USAID Administrator Mark Green
• MCC Chief Executive Officer
• 4 private sector members

Two types of MCC-funded programs:

Compact Programs (5-year grants)

• Average grant - $360 Million USD

Threshold Programs (2-3 year grants)

• Average grant - $23 million USD 2
MCC IS A UNIQUE DONOR THAT EMPHASIZES COUNTRY OWNERSHIP AND
FOCUSES ON IMPACT

• Competitive selection: MCC’s Board selects countries based on performance on

20 independent and transparent policy indicators (e.g., political rights, control of
corruption, gender in the economy)

• Country-led solutions: MCC countries identify priorities for sustainable economic

growth and poverty reduction; develop investment proposals in broad
consultation within society

• Country-led implementation: Upon compact signing, MCC countries establish

local entity to manage and oversee all aspects of implementation, using MCC
funds. MCA-Nepal is the implementing agency

• Focus on results: MCC only funds projects that are expected to have
demonstrable impact on economic growth.
• Methodical approach to project selection
• Rigorous tracking and evaluation of projects
3
MCC IS SELECTIVE AND IS CURRENTLY ONLY WORKING WITH 18 COUNTRIES
ON A COMPACT

* Indonesia compact closed on April 2, 2018 4

REASONS TO DO BUSINESS ON AN MCC COMPACT

• Payments directly from the U.S. Treasury to the Contractor’s account

• Emphasis on best value (quality, not just lowest price)

• Strict 5-year timeline for Compact completion

• Transparent and fair international competition (following MCC procurement
guidelines and managed by external Procurement Agent, under MCC
oversight)

• Emphasis on past performance and references

• Evaluation and selection by technical experts

• Compact fully funded at outset

 An Introductory
Presentation on the
MCC Nepal Compact
 Nepal Compact Highlights
• MCC and the Government of Nepal entered into a Compact to help
facilitate poverty reduction through economic growth in the amount
of $500 million USD.
• The Millennium Challenge Account-Nepal (MCA-Nepal) has been
established as the legal and accountable entity in Nepal.
• As such, MCA-Nepal is responsible for implementation of the
Compact.
• MCA-Nepal will procure all goods, works, and services funded under
the Compact using the MCC Program Procurement Guidelines,
and will enter into contracts and administer all such contracts.
• All program disbursements must be made within five years of entry-
into-force (EIF) of the Compact, which is scheduled for June 2020.
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 Nepal Compact Projects

The Electricity Transmission (ETP) The Road Maintenance Project (RMP)

 Nepal Compact Projects
Electricity Transmission
Project (ETP)
• Approx. $398M value
• Consists of 4 Activities:
1. Transmission Lines Activity
(including Partnerships
Program);
2. Substations Activity;
3. Power Sector Technical
Assistance (TA) Activity; and
4. Program Management and
Technical Oversight Activity
Road Maintenance Project
(RMP)
• Approx. $52M value
• Consists of 2 Activities:
1. Strategic Road Maintenance
Works Activity (including
pavement recycling and a
matching fund to finance new
periodic maintenance works);
and
2. Technical Assistance Activity
GON is also contributing
$130M to the compact’s
projects
Map of Approved Projects
Projects under the Compact: Electricity Transmission Project

• The objective of the Electricity Transmission Project (ETP) is to increase electricity consumption by
improving the availability and reliability of electricity supply in Nepal’s electricity grid and by facilitating
power trade:
• Investment in Nepal’s transmission network by constructing transmission lines and three substations
to expand the high voltage transmission backbone inside Nepal and support increased supply of
electricity to consumers, allowing more efficient movement of electricity across the grid, with lower
technical losses, such that supply is better able to meet demand
• Investments in cross-border interconnection by constructing Nepal side of a second cross-border
transmission line with India to facilitate increased electricity export when domestic generation
exceeds domestic demand in the rainy season, and increased electricity import when domestic
generation is at its lowest in the dry season
• Provide Technical Assistance (TA) to improve sustainability of the power sector and the infrastructure
investments by enabling Nepal Electricity Authority (NEA) to operate, manage, and maintain the new
400kV system and to newly established Electricity Regulatory Commission

• The increase of electricity in Nepal’s grid is expected to allow consumers to use more electricity to meet
their energy needs and incur less expenditures per unit of energy consumed than experienced currently.
The ETP has 3 Components
312 km of Transmission Technical Assistance
Lines 3 Substations to NEA and Nepal ERC

 Outputs and Outcomes

• 300 km of 400 kV lines added • Regional integration and

• 3,920 MW transmission capacity trade at scale
• 3,290 MVA substation capacity • Exports: 3.3 to 2,896 GWh
• TX losses reduced: 4.82% to 1.9% • Cons/cap: 133 394 500
kWh
Projects under the Compact: Road Maintenance Project

• The objective of the Road Maintenance Project (RMP) is to maintain road quality across the Strategic
Road Network (SRN):

• Provide TA related to road maintenance planning, assessment, and implementation to

strengthen the Department of Roads’ (DoR) and Roads Board Nepal’s (RBN) capacity to plan and
execute routine and periodic maintenance

• Reinforced through a learning-by-doing approach to conducting maintenance on selected

segments of the SRN
• Maintenance work will reduce road roughness and associated vehicle operating costs
• Funds will be applied using a matching scheme aimed at incentivizing allocation and
expenditure of greater amounts of road maintenance resources

• By equipping the DoR with the data, skills, and experience necessary to plan and implement road
maintenance, combined with an increased level of funding under an improved road maintenance
funding regime, it is expected that the SRN will be adequately maintained and road quality will not
deteriorate
 The RMP has 2 activities
1. Technical Assistance to 2. Enhanced road maintenance on up to 305 km
DoR of roads (based on incentive matching from GoN)

 Outputs and Outcomes

• Improved road maintenance system
• Increased funding for road maintenance
• New maintenance system applied to 300 km of Strategic Roads Network
Timeline and Current Status

Compact
Signing Entry-into- Compact
SEPT-2017 Now Force Closeout

Dec-2014 – Est. 33 Months + 5 Years from EIF

Sept-2017
Compact Project Compact Implementation and
Design Preparation Construction

MCC BoD
5-year clock
Selects Nepal
starts ticking
here
Entry into Force Date

• MCC’s implementation method requires that enough time is allotted to the project preparatory phase so
that all conditions for successful project delivery are met prior to the Entry into Force (EIF)
• Following EIF, all implementation activities must be completed within five-years, as there are no provisions
for time extensions or cost increase

Some of the key conditions to EIF are:

• Declaration of the Electricity Transmission Project as a National Pride Project - Completed
• Passage of legislation to create an Electricity Regulatory Commission - Completed
• Signing of a Project Implementation Agreement - Completed
• Completion of a plan in agreement with the Government of India for the cross-border transmission line from
Butwal, Nepal to Gorakhpur, India - - Agreement in Place
• Site Access to all project construction sites with environmental impact assessment (EIA) approval and
sufficient progress on land acquisition and forest clearance In Progress
• Ratification of the Compact agreement by the Parliament In Progress
Millennium Challenge Account Nepal
(MCA-Nepal)

Electricity Transmission Project (ETP)

Outreach Event

Kathmandu
November 18, 2019
Electricity Transmission Project
Outcomes:
• Add 3,920 MW Tx capacity; reduce losses to 1.9%
• Support 3x increase in electricity consumption per capita
• Approx. 312 km – 400 kV Tx lines (~857 towers)
• 3 x 400 kV substations
Electricity Transmission Line
Status
• Transmission Line Route Alignment frozen for all five segments
• Lapsiphedi ‐ Ratmate
• Ratmate ‐ New Hetauda
• Ratmate ‐ New Damauli
• New Damauli ‐ New Butwal
• New Butwal ‐ Nepal/India Border
• Geotechnical survey works completed
• Draft EIA document in advanced stage of preparation
Electricity Transmission Line (Works)

Transmission Lines
• 400 kV D/C; lots 90-115 km each
• 3.5 year execution
• Design-Build (FIDIC Yellow Book)
• Expected launch: Jan 2020
• Quality-Price Based Selection
• Expected contract sign: Sep 2020
Segment wise physical information

Physiographic Zone (Length Percentile) Elevation (MASL)

TL Segments
Terai Siwalik Middle Mountain Minimum Maximum
India Border to New Butwal
100% 100 120
Substation
New Butwal to New Damauli
7% 21% 72% 115 1380
Substation
New Damauli to Ratmate
100% 220 1780
Substation
Ratmate to New Hetauda
25% 75% 410 1840
Substation
Ratmate to Lapsiphedi
100% 490 1918
Substation
Lapsiphedi-Ratmate-New Hetauda 400kV D/C
Transmission Line

• Lapsiphedi – Ratmate
• Middle Mountain physiographic
zone (Ratmate to Lapsiphedi)
• Section Length : Approx. 59 km
• No. of towers: Approx. 163
• 400 kV Quad Moose Double
Circuit
Lapsiphedi-Ratmate-New Hetauda 400kV D/C
Transmission Line (contd...)

• Ratmate to New Hetauda

• Middle Mountain zone and partly in Siwalik zone
• Section Length : Approx. 56 km
• No. of towers: Approx. 142
• 400 kV Quad Moose Double Circuit
• Possibility of few Quad Moose Quad Circuit towers
Ratmate-New Damauli 400kV D/C
Transmission Line

• Middle Mountain physiographic zone

(Ratmate to New Damauli)
• Section Length : Approx. 89 km
• No. of towers: Approx. 251
• 400 kV Quad Moose Double Circuit
New Damauli-New Butwal-Indo Nepal Border
400kV D/C Transmission Line
• New Damauli to New Butwal
• Cuts across three physiographic zones - Terai,
Siwalik, and Middle Mountains.
• Section Length : Approx. 90 km
• No. of towers: Approx. 248
• 400 kV Quad Moose Double Circuit
• Few Quad Moose Quad Circuit towers near New
Butwal substation
New Damauli-New Butwal-Indo Nepal Border
400kV D/C Transmission Line

• New Butwal to India Border

• Terai physiographic zone
• Section Length : Approx. 18 km
• No. of towers: Approx. 52
• 400 kV Quad Moose Double
Circuit
Transmission line towers

Probable tower types

• Suspension
• Tension (mostly)
• Special Tower (for
long spans)
• Multi Circuit (for
corridor issues)
ACCESS ROAD CLASSIFICATION

Category Width Turn Slope Remarks

radius percent
1 ~5m min. 90 ft 0 to 15 Generally paved or unpaved and well
maintained
2 ~3m Min. 45 ft 0 to 30 Unpaved road in fair condition
3 ~2.5m Min. 20 ft 0 to 45 Unpaved narrow road in poor condition
4 ~1.5m Min. 15 ft 0 to 45 Wide trail in fair condition
5 ~0.5m- Min. 6ft 0 to 24 Narrow trail.
1m
6 Aerial access in the only option
Transmission Line Preliminary
Assessment of Road Access

Length of Access Roads per Category in each Segment

Road Category (in km)
Segment
1 2 3 4 5
New Butwal to India Border 49.0 22.2 12.4 8.8
New Butwal to New Damauli 216.2 86.0 115.1 41.1 45.2
New Damauli to Ratmate 201.5 32.4 156.7 126.8 61.2
Ratmate to Lapsephedi 21.1 65.6 97.3 57.3 25.9
Ratmate to New Hetauda 187.6 96.6 52.9 29.7 28.5
Resettlement and Land Acquisition

• Resettlement policy
framework completed
• Entitlement Matrix
completed
• RAP of Transmission
lines will be completed
by June 2020
• Land compensation
payment to be
completed by December
2020
 Challenges

• Difficult Terrain/Transportation of
materials: Elevations vary from 100
meters (330 ft.) to around 2000
meters (6563 ft.)
• Land Acquisition and securing Right
of Way
• Heavy Monsoon Season of 3
months (9 months effective in a
year)
• Forest Clearance
• Major river crossing
• Trishuli
• Kali Gandaki
• Seti
 MCA Partnership program
• ETP includes the MCA Partnership
program as a benefit sharing
component of ETP;

 Intent: Benefit sharing is intended

to ensure that the benefits from
infrastructure development are
equitably shared with people
directly and indirectly affected by
the project which goes beyond
compensation and mitigation
measures;
Thematic Areas
• Thematic Area 1: Extension and upgrading of grid-based electricity distribution system
 Extension of grid-based electricity distribution system
 Upgrading of grid-based electricity distribution system

• Thematic Area 2: Provision of off-grid electricity solutions

 Off-grid solutions to households
 Off-grid to public institutions (schools/hospitals)
 Multiple use of water (irrigation/drinking water)

• Thematic Area 3: Provision of capacity building support to increase benefits of electricity

 Municipal Energy Plans
 Trainings
 MCA Partnership program Status

• Framework developed
• Framework workshop conducted
• Data collection for Sub-Activity
ongoing
• Sub-activity consultation to be
done by December 2019
• Expected date for construction
bid release for thematic area 1 by
August 2020
• Expected date for Request for
proposal for Thematic area 2 and
3 by March 2020
Additional Employer’s
Requirements of Note

Respect IFC Gender &

Respect environ. Abide by health Engage with
Performance Social
& social clauses & safety plans stakeholders
Standards Inclusion Plan
 Expected Timeline

2020 21 22 23 24 25
Activities
Jan Feb Mar Apr May Jun Jul Aug SepOct Nov Dec Jun Jul Jun
Bid Release (in web &
Newspaper)
Site visit
Pre-bid meeting
Bid Submission
Technical Bid opening
Financial Bid Opening
Award of contract
Construction Period
Defect Notification Period
Future Outreach Event

• Delhi – November 29, 2019

For more information

• MCC-funded business opportunities, please visit:

www.mcc.gov/work-with-us
• For information on MCA-Nepal business
opportunities, please visit
www.mcanp.org
• For Q&A regarding the procurement, please contact
info@mcanp.org
Thank you
Environmental and Social Issues in
Transmission Line
ETP Transmission Line Routes
Adverse Environmental and Social
Impacts of Transmission Line

Land needs to be acquired for

transmission towers – private land or
forest.
Restriction on the use of RoW land –
46m, 23m on each side.
Access roads needed for transporting
construction materials.
Adverse Environmental and Social Impacts of
Transmission Line
Landslides/soil erosion
Pollution
Health and safety issues
Trafficking in Person
MCAN/MCC Policies
• Follow GoN rules and regulations including Land Acquisition Act,
Environment Protection Act, and Regulations, Forest Acts.

• Follow MCC Environmental Guidelines and International Finance

Corporation (IFC) Performance Standards on Environmental and Social
Sustainability.

• Follow MCC Gender Policy and Social and Gender Integration

Guidelines.
• Follow avoid, Minimize, and Mitigate hierachy.
Avoidance (Examples)
• Avoid biodiversity hotspots.
• Avoid settlements.
• Avoid cultural heritages.
Minimize (Examples)
• Minimize forest clearance by appropriate tower designs, use of
helicopters, drones, etc.

• Minimize the need for access roads by use of porters, helicopters, etc.
Mitigate (Examples)
• Use of bird diverters.
• Reforestation.
• Slope stabilization/rehabilitation works.
Thank You!
Electricity Transmission
Project
Outreach Event and Feedback
Session-Kathmandu, Nepal

18 November 2019
PROCUREMENT ASPECTS

OBJECTIVES OF THE PRESENTATION

• Provide an overview of the Procurement Process under MCC
Procurement Guidelines
• Provide Information regarding the Procurement Aspects
• Receive Questions Clarifications from Participants
TABLE OF CONTENT
• MCC Procurement Guidelines and Procurement Principles
• Procurement Method
• Scoring Methodology
• Procurement Safeguards
• Tentative Procurement Schedule
MCC Procurement Guidelines and
Principles

• Conceptual Procurement Framework is taken from World Bank, with several

differences
• Eligibility Criteria
• More Emphasis in Quality Rather than Price
• Involvement of the Donor and MCA Board
• Price Reasonableness
• Bid Challenge System
• Awarding decisions made by Consensus rather than average
• Procurement Agent (Independent) conducting all Procurements
MCC Procurement Guidelines and
Principles

• Four Principles Shape the PPG (https://www.mcc.gov/resources/doc/program-

procurement-guidelines

 Open, fair and competitive procedures used in a transparent manner to solicit, award and
administer contracts
 Solicitations based on a clear and accurate description of the goods, works or services to be
acquired
 Contracts awarded only to qualified and capable suppliers and contractors that perform in
accordance with the terms and conditions of the applicable contracts and on a cost-effective
and timely basis
 No more than a commercially reasonable price is paid to procure goods, works or services
MCC Procurement Guidelines and
Principles
• Nepal’s Government Procurement Act and Rules Does Not Apply
• PPG’s Structure
• Fifteen (15) Parts
• Two (2) Attachments
• Ninety-Two Pages (March 2019 Release)
• https://www.mcc.gov/resources/doc/program-procurement-guidelines

• Publication Requirements
• DgMarket
• UNDB
• Local Newspapers
• MCA-Nepal Web Page https://mcanp.org/
• MCC Web Page
• U.S. Embassy
• Specialized Publications
GOE Policy

1. No Government-Owned Enterprises (GOE) allowed to bid for goods &

works procurements
2. What is a GOE?
 “Government-Owned Enterprise” or “GOE” is any enterprise established for a commercial
or business purpose that is owned and/or controlled by a Government (whether directly or
indirectly).
 “Government” means one or more governments, including any agency, instrumentality,
subdivision or other unit of government at any level of jurisdiction (national or
subnational).
 “Owned” means a majority or controlling interest (whether by value or voting interest) of
the shares or other ownership interest of the entity is owned (whether directly or
indirectly and whether through fiduciaries, agents, or other means).

7
Other Key Aspects

1. MCA runs procurements and manages contracts with Procurement Agent support
2. Firms must be eligible for U.S. funding: There is comprehensive verification
process in place
3. 6 to 9 months from solicitation to contract award
4. Evaluation panel composed of technical experts
5. Best value procurement
6. Price evaluated for reasonableness
7. Infrastructure/Construction Projects require an external (non- MCA) project
manager/Engineer

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Procurement Method

• No Pre-Qualification-Shortlisting Process envisaged

• The selected Method is Quality Price Based Selection (QPBS)
• QPBS VS Lowest Evaluated Bidder
Quality and Price Based Selection (QPBS)

• Emphasis on best value (quality, not just lowest price)

• As an exception to the lowest evaluated bid principle MCA-Nepal

will use a Quality and Price Based Selection (QPBS) methodology

• Two stage evaluation process- Technical and Financial (Combined

Evaluation)

• “As such the contract shall be awarded to the qualified bidder

whose bid has been determined to have the highest combined
technical and financial score”

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Evaluation Process

• Proposal’s Evaluation is conducted by a Technical Evaluation Panel

• MCA-Nepal Staff
• Project Partners Public Sector
• Private Sector participation (Local/International)
• Auxiliary Members Expertise Available
• Members of TEP selected by their technical competence
• Facilitated by the Procurement Agent
• Supervision from MCC
• Many safeguards to keep the integrity of the evaluation process
• Impartiality and Confidentiality
• No Conflict of Interest
Scoring Methodology and Evaluation
For works: Shall be fully disclosed in the bidding document. Usually for works Bidding Document
for Design and Build Contracts procurement based on QPBS the Qualification and Evaluation Criteria
are as follows:
• Technical
• Administrative Compliance Review
• Legal Status
• Financial Criteria
• Litigation and Poor Performance Criteria
• Qualification Review
• Reference and Past Performance Review
• Technical Evaluation Criteria
• Financial
• Review of Price and Price Reasonableness
• Combined evaluation
• Multiple Lots award determination
Bid Challenge System-Key Features
• A debriefing process in place
• Two level for filing a protest
• Level 1 Authority to decide on a protest is the MCA-Nepal Executive
Director
• Level 2 Authority is an independent body, designed to review decision
of Level 1 Authority
• To File a Level 2 Appeal, fees will apply.
• Decisions of Level 2 Authority are final
• Fraud and Corruption can not be used as reason to submit protest
MCC Procurement Guidelines and Principles

• Zero Tolerance to Fraud and Corruption

• MCC has available several mechanism to deal with allegations of Fraud and
Corruption.
• Fraud and corruption shall be reported as per MCC Policy of Preventing,
detecting and Remediating Fraud and Corruption.
Procurement Process Safeguard

• Several layers of review and approvals

• International Expertise (on MCC procedures) for conducting the procurement
• Independent private sector consultants participating in evaluation
• Open access to Request For Proposal documents
• Pre-proposal conference and Clarification Period
• Mandatory procedure for debriefing to unsuccessful bidders
• Bid Challenge System in place (see web page)
 Tips for Winning Contracts

• In-country contractors and consultants are encouraged to form alliances with

international firms to enrich and enhance their experience.
• MCA/MCC Bidding Documents should be reviewed carefully, as MCC uses its own bidding
documents.
• Ensure your bid is signed and submitted before deadline of submission.
• Bidders should, as best as possible, use the forms provided in the bidding documents,
rather than use their own.
• Bidders are encouraged to read through the MCC Program Procurement Guidelines.

17
 Tips for Winning Contracts

• Fixed Price Contracts. Understand that most MCC contracts are fixed-price contracts, and
the decision is price-sensitive, so put in your best possible price.
• Zero Tolerance to Fraud and Corruption.
• Bidders are encouraged to request information and clarification from the MCA if there is
anything they do not understand, of if they require more information.
• Understand MCA’s Bid Challenge System

18
 Other Key Procurement Tips

• Bid Security required– ensure it accompanies the bid with the corresponding bank
enforceable in Nepal.

• Advance payment requires a bank guarantee, enforceable in Nepal.

• Performance bank guarantees, similar conditions apply.
• The standard bidding document (SBD) contract formats have been reviewed and
approved by MCC– agree to them before bidding.

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Procurement Schedule

• Procurement to be Launched: Early 2020

• Submission of Proposals: Mid 2020
• Evaluation of Proposals: 2 months
• Awarding Date: Third Quarter 2020
• Commencement date: Early Fourth Quarter 2020
• Completion of Works: Mid 2024
• DLP : Ends on June 2025
Question and Answers

Questions and Answers

Thanks!!!
 Millennium Challenge Account Nepal (MCA-
Nepal)

Electricity Transmission Project (ETP)

Substation Activity

Outreach Event

Kathmandu

18/11/2019 1
Electricity Transmission Project
Features:
• Project supports to increase in country per capita
electricity consumption
• 3 x 400 kV major substations

18/11/2019 2
Project Location(route map)

KTM-GALCHI-RATMATE
S/S : 62km

KTM-MUGLING-NEW
DAMAULI S/S : 153km

KTM-NARAYANGHAT-
NEW BUTWAL S/S : 239km

18/11/2019 3
Substation Details-Ratmate S/S

Parameter
Location Nuwakot District
Coordinate 27°51'3.89"N, 85° 3'11.79"E
Type GIS
Nominal Voltage 400 kV and 220 kV
Bus Configuration Breaker and half
Capacity 1,000 MVA

18/11/2019 4
Substation Details-New Damauli S/S

Parameter
Location Tanahu District
Coordinate 27°58'3.57"N, 84°17'41.25"E
Type GIS
Nominal Voltage 400 kV
Bus Configuration Breaker and half configuration
Capacity 1,000 MVA

18/11/2019 5
Substation Details-New Butwal S/S

Parameter
Location Nawalparasi-West District
Coordinate 27°34'25.63"N, 83°41'19.44"E
Type GIS
Nominal Voltage 400 kV
Bus Configuration Breaker and half configuration
Capacity 630 MVA

18/11/2019 6
Substation Works Key Features

Substations
• 400 kV GIS Substation
• 3.5 years construction period
• Design-Build (FIDIC Yellow Book)
• Expected date of bid launch: Jan 2020
• Quality-Price Based Selection
• Expected contract signing date: Oct 2020

18/11/2019 7
 Project preparation and construction supervision

• Project preparation consultant in place to support project preparatory works

• Quality of Engineering as well as E&S related deliverables top priority
• As per FIDIC provisions, ENGINEER will be in place for reviewing design/drawings and
ensuring quality of construction works during project implementation phase
• Project end date is already defined and under no circumstance the same may be extended

18/11/2019 8
Resettlement and Land Acquisition

• Resettlement policy framework

finalized and approved
• Entitlement Matrix approved

18/11/2019 9
 Project Status

• Land acquisition status for three main substations

• New Butwal Substation: Land acquisition and compensation related issues resolved
• New Damauli Substation: NEA has initiated land acquisition process and is expected to
complete in few months time
• Ratmate Substation: it will be completed in advance of contractor mobilization just
because of some uncertainties

18/11/2019 10
 Project Status contd…

• Land acquisition status for other two substations(Only some interface activities)
• New Hetauda Substation: Land acquisition and compensation related issues resolved
• Lapsiphedi Substation: Land acquisition and compensation related issues resolved
• Geotechnical investigation works at S/S locations mostly completed
• Draft EIA document in advanced stage of preparation
• Tender level Engineering Design/Drawing/Tech.Specs nearly complete

18/11/2019 11
 Challenges

• Transportation of heavy and bulky

equipment
• Design load bearing capacity of
road, its condition and width
• Design load bearing capacity
of bridge and its condition
• Land Acquisition for Ratmate
S/S
• it will be completed in
advance of contractor
mobilization just because
of some uncertainties
• Active monsoon season of around
three months in a year
• Major festival season affecting
around one month of work per year
• Defined project completion date i.e.
June 29, 2025
18/11/2019 12
Expected Timeline

2020 21 22 23 24 25
Activities
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jun
Bid Release (in web & Newspaper)
Site visit
Pre-bid meeting
Bid Submission
Technical Bid opening
Financial Bid Opening
Award of contract
Construction Period

18/11/2019 13
Possible adverse E&S impacts of substation construction

• Public and/or private land needs to be acquired for Substation and access roads.
• Pollution (Air, Water, Fuel, Lubricating Oil and Noise)
• SF6 Gas Leakage possibility
• Pressure on community resources (e.g. existing roads, water, trees etc)
• Trafficking in person.

18/11/2019 14
 MCAN/MCC Policies

• Follow GoN rules and regulations including Land Acquisition Act, Environment Protection Act,
and Regulations, Forest Acts.

• Follow MCC Environmental Guidelines and International Finance Corporation (IFC)

Performance Standards on Environmental and Social Sustainability.

• Follow MCC Gender Policy and Social and Gender Integration Guidelines.

• Follow avoid(settlements, cultural heritages, schools, health posts etc), minimize(land requirement
by using GIS technology etc.) and mitigate(using good condition silent DG sets, water sprinkler
etc) hierarchy.

18/11/2019 15
Additional Employer’s Requirements

Respect IFC Gender &

Respect environ. Abide by health Engage with
Performance Social Inclusion
& social clauses & safety plans stakeholders
Standards Plan

18/11/2019 16
Future Outreach Event

• Delhi – November 29, 2019

18/11/2019 17
For more information

• For MCC-funded business opportunities, please visit: www.mcc.gov/work-with-us

• For information on MCA-Nepal business opportunities, please visit: www.mcanp.org

• For Q&A regarding the procurement, please contact: info@mcanp.org

18/11/2019 18
 Thank you

18/11/2019 19
Power Sector Technical Assistance Activity

NEA Readiness Assessment And

ERC Support Assessment

Outreach Event

18th November 2019

1
Nepal Compact Highlights

• MCC and the Government of Nepal entered into a Compact to help facilitate
poverty reduction through economic growth in the amount of $500 million USD.
• The Millennium Challenge Account-Nepal (MCA-Nepal) has been established as
the legal and accountable entity in Nepal.
• As such, MCA-Nepal is responsible for implementation of the Compact.
• MCA-Nepal will procure all goods, works, and services funded under the
Compact using the MCC Program Procurement Guidelines, and will enter into
contracts and administer all such contracts.
• All program disbursements must be made within five years of entry- into-force
(EIF) of the Compact, which is scheduled for June 2020. (July 2020 to June end
2025)
19-Nov-19 Reducing Poverty Through Growth 2
Electricity Transmission Project

The overall objective of the MCC Compact with Nepal is

“To increase domestic consumption of electricity and to support increased
regional power trade.”
Objective of Electricity Transmission Project (ETP) is
“To increase domestic electricity supply for consumption by improving the
availability and reliability of electricity in Nepal’s electricity grid.”

Components of ETP:
• Transmission Line Activity
• Substation Activity
• Power Sector Technical Assistance Activity
• Program Management and Technical Oversight Activity
Overview of ETP

Outcomes:
•Add 3,920 MW Tx capacity; reduce losses to
1.9%
•Support 3x increase in electricity consumption
per capita Approx. 312 km – 400 kV Tx lines
(~850 towers)
3 x 400 kV substations

4
Guiding Key Documents

The Parties will perform their responsibilities under this Agreement in accordance
with the following documents, as amended from time to time (collectively, the “Key
Documents”):

1. the Compact (US Government Grant Agreement);

2. the Program Implementation Agreement – addendum to the Compact;
3. the MCC Cost Principles for Government Affiliates Involved in Compact
Implementation;
4. the MCC Program Procurement Guidelines.

5
MCC Directives

MCC Technical Directive Nepal-01:

 Directives to assess needs for effective operation of newly formed ERC and NEA’s
readiness and ability to respond

MCC Technical Directive Nepal-11:

 Directives to assess gaps and areas for TA to NEA including its Environment and Social
Studies Department (ESSD)

6
Power Sector Technical Assistance Activity
Description of the Project

Aim of the Activity is to Support the Electricity Regulatory Commission

(ERC) and Nepal Electricity Authority (NEA)
Project For ERC/NEA- Directive 1
 Analyze risks and opportunities to the Nepal Electricity Authority (NEA) presented by the
establishment of an Energy Regulatory Commission (ERC) and assess NEA readiness and ability to
respond.
 Support efforts to pre-position Compact to move forward with support to the ERC once
operationalized.

Project For NEA-Directive 11

 Helping NEA for improvement in transmission line business in the areas of regulatory cost recovery
and improved grid operation
 Training in system and market operation
 Financial Management for transmission transactions and assets
 Targeted human resources policies and job clarifications
7
Status of TA Activities to ERC/NEA

Activity to Support ERC and NEA, MCA is performing Needs

Assessment
Activities:
Consultations with ERC and NEA has been completed
Joint high level workshop with NEA officials, ERC, Line Ministry & Bilateral
Organization was completed
Draft report has been circulated to NEA for their comments and observations.
MCA- Nepal is planning to proceed the procurement process after receiving the
final report from the consultant.

8
Status of TA Activities to NEA

To provide Technical Assistance (TA) to Nepal Electricity Authority (NEA)

MCA is performing Needs Assessment
Activities:
Task 1: Technical Assistance to NEA
Consultations with NEA has been completed
Joint high level workshop with NEA officials, ERC, Line Ministry & Bilateral Organization was
completed
MCA- Nepal is planning to proceed the procurement process after receiving the final report
from consultant.
Task 2 Sub-Transmission System Modeling and System Protection

Spatial load forecast, Sub-transmission expansion plan and system protection coordination study
is ongoing

9
Technical Assistance to ERC/NEA

10
Implementation Framework For ERC TA

• Foundation Phase Activities

• Advance Phase Activities

Note: Study is still ongoing and presented activities are based on the draft phase
of the study. Activities may change / modify in the final phase of the Study.

11
Support to ERC/NEA
Overall Logic of MCA’s Technical Assistance to ERC

12
 Foundation Phase Support Activities

• Professional and organizational development (capacity building) for Members and

senior staff, including,
• Assistance with the further development and implementation of the ERC’s Strategic and
Organizational Plans.
• Service as embedded regulatory expert advisor to Members pending the development of expert
advisors on ERC staff.
• Exposure to regional regulators; membership in regional regulatory organizations;
reciprocal visits with regional regulators. Initial focus will be visits to jurisdictions with
vertically integrated utilities similar to NEA, both successful and not.
• Publication, subscriptions and organizational memberships.
• Attendance at relevant conferences.

• Support for establishing foundational documents at ERC

• Rules of practice and procedure.
• Costing and Pricing By-laws, Directives and Cost Models.
• Additional substantive rules as needed.
• Hardware and software for basic cost of service models for generation, transmission, distribution
13
and trading licensees available to Finance, Engineering and Economic staff.
Foundation Phase Support Activities
• Infrastructure
• ERC Regulatory Information Management System (RIMS).
• Docketing system and Document Management System (DMS).
• Website with electronic filing and reporting, consumer information, access to DMS.
• Hardware/software needs of permanent staff.
• Basic training for employees
• Training in regulatory theory and practice for each discipline.
• Training on elements of a tariff filing.
• Training in embedded and marginal cost theories.
• Training on elements of tariff design and evaluation for Generation,
Transmission, and Distribution services.
• Establishment of internal training protocols for on boarding new employees;
developing in-house trainers.
• Site visits to generation, transmission and distribution facilities.
• International training visits, including travel to jurisdictions that are developing
competitive wholesale or retail markets 14
Foundation Phase Support Activities

• Support in Technical Areas

• Training in basic transmission and distribution grid planning and operations
• Training in technical areas required to evaluate proposed technical codes; support in
designing and evaluating the grid code, other technical codes and cross border
regulations.
• MCA Consultant to assist ERC staff on evaluation of technical filings, including
reliability measures, interconnection standards and similar technical matters.
• Training on the functioning of competitive wholesale electricity markets, transmission
open access regimes, financial transmission rights, compensation for wheeling, etc.
• Training on Open Access and Transmission Charges.
• Training on Cross Border Electricity Trade

15
Foundation Phase Support Activities

• Management Function
• Assist in developing a system for evaluating employee performance; develop
performance indicators; train supervising employees on employee performance
evaluations.
• Formalize “3-tier” decision-making process; designate advisory staff and assist in
their development.
• Supervise/manage staff of combined interim and permanent employees; advise the
Commission Secretary.
• Advisory Function
• Senior MCA Consultant develops and manages team of advisors to fulfill the
second tier of the decision-making process.

16
Advance Phase Support Activities

• Professional and Organizational Development

• Advanced regulatory training in U.S. for Members.
• Annual commission-wide planning retreats.
• Participation in NARUC Commission international exchange program.
• Commission Information Meetings (CIMs) with industry/consumer presentations.

• Advanced training for permanent staff

• PURC/World Bank training at University of Florida or similar opportunities.
• Ongoing in-house training on advanced technical and financial topics using expert
consultants.

17
Advance Phase Support Activities

• Additional Infrastructure
• Provision of office automation system (IT-based workstations) in new offices, including
software/hardware/server and other necessary office logistics.
• Pickup van and vehicles for ERC members and staff.
• E-Court and E-Hearings capability.

• Guidance and capacity building for advanced topics; consultant-led in-house

training modules on:
• Systematic approaches to reviewing utility filings.
• Tariff modeling and analysis.
• Open access transmission; developments of rules and tariffs.
• Least cost planning
• Training on theory of least cost planning
• Training on system expansion software
• Competitive bidding for IPPs.
• Performance-based regulation.
• Mitigation of market power with tools such as divestiture and pricing limits.
18
Advance Phase Support Activities

• Management Functions
• Support and assist the develop permanent management staff, including
preparation of Terms of Reference and Position Descriptions for use in
recruitment.
• Advise Members on legislative proposals
• Training on E-court and E-hearing system.

19
Overall Logic of MCC’s Technical Assistance
to NEA

20
Technical Assistance Activities for NEA

Technical Assistance
Illustrative Activities
Category
⇒ Work with NEA management to design a regulatory compliance unit.
⇒ Create job descriptions and/or terms of reference for personnel in the regulatory unit.
⇒ Recruit or supply regulatory specialists to staff regulatory unit
Regulatory Readiness ⇒ Support consultant to train and advise regulatory unit staff.
⇒ Establish liaison to engage with ERC members and staff.

⇒ Supply consultant with experience in regulatory accounting.

Regulatory Accounting ⇒ Provide liaison to ERC financial technical staff on accounting requirements

⇒ Embed consultant(s) to assist NEA staff in preparing a tariff filing;

⇒ As needed, train NEA staff and assist staff in the preparation of a revenue requirements
study;
⇒ As needed, train NEA staff and assist in the preparation of a marginal cost of service
Tariff filing study;
⇒ As needed, train NEA staff and assist staff in the preparation of a class cost of service
study;
⇒ Provide regulatory legal assistance in preparing application for a revised tariff. 21
 Technical Assistance Activities for NEA

Technical Assistance
Illustrative Activities
Category
⇒ Fund consultant to produce or assist in producing TOU/Seasonal
Rate design studies.
⇒ Fund possible international visits to utilities for consultation.

⇒ Fund vendor training on software;

Least cost planning
Energy Efficiency & Demand
Response
Seasonal Costing and Pricing
Studies
⇒ consultant to review load forecast;
⇒ assist preparation of plan with sensitivity analyses, as required by
ERC.
⇒ Fund EE and DR capacity study;
⇒ Design EE program
⇒ Identify all cost-effective measures
⇒ Analyze impact on Low and Moderate Income (LMI) customers
⇒ Integrate EE and DR into least cost planning effort
⇒ Fund engineering consultant to provide marginal cost study with
seasonal analysis.
22
 Technical Assistance Activities for NEA

Technical Assistance
Illustrative Activities
Category

⇒ Survey all system and customer data currently collected

⇒ Assess quality of data
Data Analysis ⇒ Research use cases for data
⇒ Fund consultant to design data use function within NEA
⇒ Fund international exposure to utilities with successful data analytics.

⇒ Fund consultant to review progress of functional unbundling and to

prepare plan for full unbundling in advance of the creation of a
Unbundling competitive wholesale market.

23
 Key Investments: Regulatory Support

Procure Launch
Activity Description
(Expected)
Embedded Regulatory • Up to 4 embedded technical and mgmt. advisors at ERC Early-2020
Advisors • Capacity building, analysis, guidance & mentoring
Tariff Study • Developing tariff methodology & guidelines Early/mid-2020
• Assessment of subsidies & affordability
Regulatory Info & Docket • Development of requirements/specs & scoping Mid-2020
Mgmt. Systems • Supply & installation of RIMS & DMS w/training Early/Mid-2021
Technical Code • Development of updated Grid Code, planning code Early-2021
Development Support • Training & consultations
Social Equity Integration & • Study/analysis of key issues on social equity in electricity TBD
Consultation sector & integration in regulatory requirements
• Training on stakeholder engagement & social equity issues
Miscellaneous logistical • Basic hardware/software & other operational requirements TBD
support
24
Technical Assistance to NEA

25
NEA Challenges

• Achieving investment goals in generation and network expansion

• Meeting network capacity requirements
• Improving system reliability
• Improving financial viability

26
Areas of Activities

• Business Operations – Asset Management

• Network Planning
• Network Operation
• Network Maintenance
• Engineering
• Environment & Social Impact Management
• Finance

Note: Study is still ongoing and presented activities are based on the draft phase
of the study. Activities may change / modify in the final phase of the Study
27
Business Operations Overviews- Asset Management

Business Process
Establishing performance measures and management
Adopting the industry standard Asset Management Model

Activities on Asset Management:

• Asset Management Model and Process Implementation
• Asset Management Information System
• Asset Maintenance Improvement Program

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Network Planning

Activities on Network Planning:

• Electricity Demand Forecasting (spatial demand forecasting) and
training
• Upgrading of PSS/E facilities at NEA and training
• Capacity Enhancement of Transmission Network Planning and
Function
• Restructuring the system planning function to make it efficient

29
System Operation

Activities on System Operation:

• Upgrade of the Grid Code, technical codes for transmission, distribution,
interconnection, etc
• Capability Enhancement
Structured training programs on all aspects of maintenance functions to maintain
competency level (off-site and on-job)
Health and safety training
Training in System Operations areas for knowledge development
• INPS Protection Coordination Study
• Implementation of Digital Fault Recorder in substations
30
Network Maintenance

Activities on Network Maintenance:

• Enhanced Geographic Information System (GIS) Application
• Aerial-based Maintenance Program
 Activities for inspections, restoration and commissioning
• Live Line Maintenance Program
 Activities for OH line and substation
• UAV-based Maintenance Program
 Inspection and aerial survey
• Mobile Information Technology Platform
 Information flow and reporting
• Specialized Testing and Measuring Devices
 Equipment testing, corona testing, real-time line rating and condition monitoring
31
Engineering

Activities are:
• Consolidating project management function for
• Transmission line projects
• Substation projects
• Improving staff technical skills in
• design requirements and engineering of construction projects
• project management, contract & procurement management
• Establishing centralized project data and drawings management
system

32
Environment & Social Impact Management

Activities are:
• Improvement of Social and Environmental Policies and Legal Framework
• Environmental and Social Polices and Program
• Corporate Social Responsibility Program
• Project Communication Plan
• Optimization of ESSD structure and role within NEA
• Revision of the ESSD structure and effective
• Establishment of a ESSD mission and system for interaction with other departments
• Improvement of the ESSD team and performance (personnel and equipment)
• Development of methods and tools for ESIA and monitoring of transmission lines
• Development and implementation of a training program
• Development and implementation of a knowledge management system
• Development and implementation of a simplified mechanism to acquire external consulting
services
• Upgrade and modernization of equipment used for data collection and study reports 33
Support Activities : Finance
Need
Implementation of Fully Integrated ERP
System
Compliance with Accounting Standards
Budget Management and Financial
Forecasting
Investment Analysis, Capital Budgeting
and Funding
Implementation of Cost-Reflective and
Regulated Tariffs
Recommendation
Identify and support in areas where additional resources and
capacity could be supplement the ongoing ERP implementation
process
Identify and support in areas where resources and capacity could
be provided in compliance with Accounting Standards
Review and improve financial forecasting, resource planning and
budget management processes with capacity building and
systems
Organization-wide review; Development of Policies and
Procedures; Implementation of streamlined and up-to-date
techniques
Provide additional resources and capacity in ongoing tariff
scheme changes and interface with the Regulator
34
Key Investments: Transmission Business Strengthening

Procure Launch
Activity Description
(Expected)
Asset Management Model • Utility experts for analysis, process review & update, capacity Early-2020
Advisor building to introduce asset mgmt. model
Asset Management Info • Software/info system to support asset mgmt. model at NEA Mid-2020
System • Scoping & requirements/specs; supply & install
Training & equipment to • Network development including design standards/technology, Mid/Late-2020
support Utility environmental/social assessment & monitoring, project &
Operational Activities contract management
• Asset maintenance including condition assessment,
monitoring, live-line maintenance,
System Planning support • Software upgrades & training TBD
• Process strengthening & capacity building
System Operations • Protection & control coordination updates TBD
• Substation automation strengthening
• Analysis & updates to scheduling, dispatching, settlement 35
Thank You

36