Options for Adjusting Revenue Requirement and Tariff Structure in Congo's Electricity... Tender

Procurement Summary

Country : Congo

Summary : Options for Adjusting Revenue Requirement and Tariff Structure in Congo's Electricity Sector (2)

Deadline : 15 Jan 2024

Other Information

Notice Type : Tender

TOT Ref.No.: 94572537

Document Ref. No. : 0002006036

Financier : International Bank for Reconstruction and Development (IBRD)

Purchaser Ownership : Public

Tender Value : Refer Document

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Tender Details

Expression of Interest are invited for Options for Adjusting Revenue Requirement and Tariff Structure in Congo's Electricity Sector (2)

BACKGOUND. The Republic of Congo has significant energy resources; mainly hydroelectric; oil; and gas. The hydroelectric potential is estimated at 27;000 MW; of which only 1 percent is currently exploited. Of the installed capacity of 749 MW; 640 MW are available during high water periods compared to 598 MW during low water periods; if the largest turbine is stopped (170 MW); this available power is reduced to 428 MW; while the peak demand was 446 MW in 2018; indicating stress between supply and demand. Meanwhile; the demand continues to grow rapidly and steadily; between 10 and 20 percent per year in recent years. Despite national energy resources; access to electricity remains low with a national electricity access rate of only 31 percent. In urban areas; where 64 percent of the 5.9 million Congolese live; mainly in Brazzaville and Pointe Noire; the electrification rate is 50 percent while only 13 percent of the rural population has access to electricity. The commercial performance of the public company E2C; established in 2018 as an asset company but also temporarily taking over operations of the former national electricity company SNE in all segments of the electricity supply chain; has been poor. The total network losses are between 40 and 45 percent; about 44 percent of E2C's customers are billed on a flat rate or receive electricity for free; and the current bill recovery rate is 73 percent without significant recent improvement. Furthermore; current tariffs do not cover the cost of service provision; which; combined with operational inefficiencies of the national public service; further widens the gap. Electricity tariffs have been unchanged since 1994 and now need to be adjusted; on the one hand; to contribute to the recovery and financial viability of E2C and other operators; and on the other hand; to be adapted to the households' ability to pay; even the most disadvantaged. As part of the implementation of the reform activities in the electric power sector; the PEEDU financed a study on electricity demand and pricing in the Republic of Congo; conducted by ARTELIA Ville & Transport - PPA Energy; from June 2014 to July 2015. The overall objective of this study was to determine tariffs that ensure the financial balance of the sector and its development while improving the living conditions of the population.In addition to this study; in 2020; the International Brain Consulting Firm (Cabinet IBC) was selected for a mission to propose tariff grids applicable to users of the electricity sector. 2. OVERALL OBJECTIVE In light of the above; the World Bank Group (WBG) as part of its Programmatic Advisory Support and Analytics (PASA) program for the energy sector of the Republic of Congo (RoC); has proposed technical assistance to the GoRC/ARSEL; to strengthen its tariff setting capacity and ultimately raise the financial viability of the electricity sector. With funding from the Energy Sector Management Assistance Program (ESMAP); the WBG; will prepare: (i) a cost of service study (CoS); to analyze options and develop a recommended methodology for calculating the annual revenue requirement (ARR) for the power utilities that would allow them to efficiently operate; (ii) identify a financial model for the electricity sector; which will provide a framework to anchor financial planning at the utility level; and (iii) recommend improvements to the existing tariff structure for electricity service provided by E2C to its customers. The WBG is seeking to hire a consulting firm (the Consultant) to help carry out the needed analyses. The exact scope of work is defined thereafter.

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