CONSULTANCY SERVICES FOR FINANCIAL ADVISORY AND MODELLING SERVICES

Country:

Tanzania

City/Locality:

Dar es Salaam

Notice/Contract Number:

PA/001/08/HQ/C/140

Publication Date:

Aug 7, 2008

Deadline:

Aug 29, 2008

Funding Agency:

Songo Songo Gas Development Project

Buyer:

Songo Songo Gas Dev and Power Gen Project/TANESCO Component
TANESCO

Original Language:

English

Address:

Mr. N.O. Suke
Secretary, TANESCO Tender Board
TANESCO
TANESCO Head Office
Umeme Park Building, Ubungo-Morongoro Road, Ground Floor, Room G.15, P.O. Box 9024
Dar es Salaam
Tanzania

Telephone:

(225 22 2451145/2452172

Fax:

(255) 22 2451145/2452172

Email:

Click here

THE UNITED REPUBLIC OF TANZANIA

TANZANIA ELECTRIC SUPPLY COMPANY LIMITED

EXPRESSION OF INTEREST FOR PROVISION OF CONSULTANCY SERVICES FOR
FINANCIAL ADVISORY AND MODELLING SERVICES UNDER FINANCIAL STRENGTHENING OF TANZANIA ELECTRIC SUPPLY COMPANY LIMITED

(IDA Credit 3569 - TA)

Bid No. PA/001/08/HQ/C/140

Introduction

This request for expressions of interest (EOI) follows the restructuring of the Songosongo Gas Development and Power Generation Project Credit No. 3569-TA to obtain consultancy services inter-alia on Financial Advisory and Modeling services for Financial Strengthening of Tanzania Electric Supply Company (TANESCO) Limited.

The Government of the United Republic of Tanzania had applied for financing from the International Development Association (IDA) toward the cost of Songosongo Gas Development and Power Generation Project. The Government intends to apply a portion of the fund savings from the above project to the eligible payments for Provision of Consultancy Services for Financial Advisory and Modelling Services under Financial Strengthening of Tanzania Electric Supply Company Limited for which this Expression of Interest (EoI) is advertised.

The Tanzania Electric Supply Company Limited (TANESCO) is a utility company owned by the
Government of Tanzania its core business activities being generating, transmitting, distributing and selling electricity. TANESCO now invites eligible qualified consultants to express their interest in participating and submitting their Expression of Interest (EoI) to provide the following consulting services: Financial Advisory and Modelling Services for Financial Strengthening of Tanzania Electric Supply Company Limited (TANESCO).

Eligible Interested Consultants must provide information indicating that they are qualified to participate in providing the services (brochures, description of similar assignments, description of experience in similar conditions, availability of appropriate skills amongst staff and any other relevant information). Consultants may associate to enhance their qualifications.

Objectives

The Tanzania Electric Supply Company Limited (TANESCO) has in the past few years experienced bad hydrological conditions that greatly affected hydropower generation and hence affected the planned generation mix ratio of 67% hydro to 33% thermal to 53% hydro and 43% thermal. During the year 2006, the Company made an operating loss of Tanzania shillings 165,633 million, against an operating loss of Tanzania shillings 49,918 in the previous year. The loss is attributed to the increase in operating expenses especially energy purchase cost from independent power producers.

TANESCO has carried a level of debt as at 31st December 2006 amounting to 37% of total assets, the level of debt has trebled in the last three years and the Government of Tanzania has guaranteed a further Tanzanian shillings 300 billion borrowings in support of the company. The company has on average made losses since 2000 that have effectively been covered through a degree of decapitalisation that has reduced the net worth of the company to the Government as shareholder and a series of equity capital injections in the company by the Government that add to the level of support that the Government has provided to the company.

In light of the above background, the project objectives include among other things: assisting TANESCO with the development and implementation of plans that will enable the company to operate on a financially sustainable basis while reducing its reliance on the Government for financial support. The said assignment shall have two main areas of activity namely planning and implementing financing strategies that increase the number of financing options at TANESCO’s disposal, reduce its cost of capital and the need for support from the Government over time and the measurement of its cost of service and devising ways from, a financial perspective, to minimize its cost of service over time.

The outcome of the consultancy services on Financial strengthening of TANESCO shall reduce reliance on Government financial support. It shall also increase TANESCO’s attractiveness to providers of finance, including those financing private sector suppliers to TANESCO such as independent power producers that consequently rely on TANESCO to pay for their services.

Scope of the Services

To achieve the above objectives it is envisaged that the successful consultant will be a firm with two nominated individuals would carry out the services specified below. The first individual would act as Team Leader and Financial Advisor, while the second individual would perform the role of Financial Modeller:

A. Financial Planning & Execution

-Oversee the development of the Financial Model and analyze the model to provide advice on how TANESCO’s financial position can be improved and assist TANESCO with the preparation and execution of short-term and long term finance plans that shall improve credit quality, reduce its cost of capital and reduce the level of support required over time from the Government of Tanzania;
-Assist TANESCO with its external relations with EWURA and donor partners such that a spirit of partnership is engendered and also identify the investment needs of TANESCO viz. in the generation, transmission as well as the transmission sub-sectors;
-Support TANESCO in analyzing and discussing arrangements with major customers and suppliers, particularly current/prospective private power producers regarding Power Purchase Agreements, Buyouts, and other financial transactions impacting TANESCO’s financial heath and its ability to service its financial obligations.
-Review TANESCO’s plan for access expansion, estimate financing needs and carry out financial analysis of the proposed investments. Estimate financial sources needed to achieve the proposed targets, develop financial plans and provide other financial advice regarding activities agreed with the Client that support the Objectives.

B. Financial Modelling

Using the existing TANESCO’s revised financial model for the Advisory Services under the Tariff Study and Financial Modelling (“Financial Model”), the Financial Modeller shall carry out the following activities:
-Assist the Team Leader in the design of a series of key performance indicators that are relevant to management and external partners such as donor partners and EWURA and expand the Financial Model from the current monthly cash flow projections to December 2012 to annual projections for the period from 2013 to 2033 so that the Financial Model can be used to project or assess other beneficial options including setting up the level and structure of TANESCO’s future tariffs;
-Develop the Financial Model that will be able to calculate the required revenue using operational cost recovery, long run marginal cost or long run required revenue methodologies, calculate revenue by customer class and service charge categories as determined by the Electricity and Water Utilities Regulatory Authority (EWURA);
-Assist the Team Leader and TANESCO’s Chief Financial Officer (CFO) to model short and long term financing plans that match operational funding requirements and the funding of capital expenditure plans resulting from the associated Long Term Power Master Plan Study.
-Run the Financial Model at the request of the Team Leader and the Chief Financial Officer to produce agreed scenarios aimed at optimizing the way that TANESCO is financed;
-Add provision for future generation capacity increments whether owned and financed by TANESCO or third parties such as Independent Power Producers;
-Work with the Strategic Planning and Finance units of TANESCO to maintain the Financial Model so that it remains up to date in all aspects of its use.
-Train two TANESCO staff in the use of the Financial Model. The Financial Modeller shall have a responsibility of version control and designing a process to maximize input from TANESCO staff whilst maintaining the overall integrity of the Financial Model;
-Other Financial Model related activities agreed with the Client(TANESCO) and the Team Leader that support the Objectives.

Selection

A successful consultant will be selected in accordance with the Guidelines Selection and Employment of Consultants by World Bank Borrowers dated May 2004 and revised on October 1, 2006.

Eligible Interested Consultants may obtain further information at the address below from 09.00 – 12.30 hours and 14.00 – 16.30 hours local time (Monday to Friday) exclusive of public holidays: Secretary, TANESCO Tender Board, TANESCO Head Office-Umeme Park
Building, Ubungo-Morogoro Road, Third Floor, Room No. 305A,
P.O. Box 9024, Dar Es Salaam, Tanzania, Tel: 255 (22) 2451145/2452172;
Fax: 255 (22) 2451145/2452172; Attn: Mr N.O. Suke.

Expression of interest (One (1) Original and Five (5) copies) with the accompanying materials should be submitted to the address below before or at 14.30 hours local time on 22nd August 2008.
Secretary, TANESCO Tender Board, TANESCO Head Office-Umeme Park
Building, Ubungo-Morogoro Road, Ground Floor, Room G.15,
P.O. Box 9024, Dar Es Salaam, Tanzania,Tel: 255 (22) 2451145/2452172;
Fax: 255 (22) 2452172/2451145.

No proposals are required to be submitted at this stage. On the basis of obtained information from eligible interested consultants, TANESCO will prepare a shortlist of Consultants and select the firm with the most appropriate qualifications and references. The selected firm will be asked to submit a combined technical and financial proposal and then be invited to negotiate a contract.

Place, Date and Time of Opening

The Documents for Expression of Interest submitted to the above address shall be opened publicly in TANESCO Twiga Board Room immediately after 14.30 hours local time on 29th August 2008.

Late submission of the documents, portion of documents, electronic documents, documents not received, documents not opened at the opening ceremony shall not be accepted for evaluation irrespective of the circumstances.

SECRETARY
TANESCO TENDER BOARD

CONSULTANCY SERVICES FOR FINANCIAL ADVISORY AND MODELLING SERVICES

Request For Expressions of Interest

General Information

Contact Information

Assignments

Original Text

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