Financing

Subject to availability of funds, support financing can be provided to mini grid developers by the Rural Energy Fund (REF), which is managed by the Rural Energy Agency (REA).

The process for requesting financing support entails the following steps. Further details are available by clicking on each step.

Key facts
Prerequisites / Conditionalities:
Cost:
Duration:
Competent Authority:
Issuing Authority:
Required/Supporting Documentation:

            
                    Concept Note
                
The Project Developer should submit a Concept Note to the Rural Energy Agency (REA) in order to get a preliminary assessment of whether the planned project is eligible for support from the REA. The Concept note should, inter alia, include:
 	The background of the prospected project
 	Market assessment 
 	Energy resource assessment 
 	Technical assessment 
 	Management & institutional aspects 
 	Financial assessment 
 	Environment and social assessment
  Risk Analysis

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              Required/Supporting Documentation:
            
Concept Note
                
                    Concept Note Appraisal
                
REA assesses the concept note in order to ensure that it is aligned with REA's mandate and objectives and that it is eligible for support. REA will provide feedback to the Project Developer on the concept note within one (1) month from the submission date.

        Key facts 
  Prerequisites / Conditionalities: 
  Cost:
  Duration:1 month
  Competent Authority:REA
  Issuing Authority:

              Required/Supporting Documentation:
            
                    Prefeasibility Study and draft Business Plan
                
The Project developer should prepare a pre-feasibility study and a draft business plan for the proposed project to determine the project’s technical, economic, financial, social, environmental and operational viability. It should be noted that only projects which are non-financially viable without capital support but otherwise viable are expected to be eligible to receive capital support from REA given its availability.

        Key facts 
  Prerequisites / Conditionalities: 	The concept note for the project has been approved by REA
 	Only projects which are non-financially viable without capital support but otherwise viable shall be eligible to receive capital support from REA
 
  Cost:
  Duration:
  Competent Authority:
  Issuing Authority:

              Required/Supporting Documentation:
            
Pre-feasibility Study [Template]
 	Draft Business plan [Template]
                
                    Application for Grant
                
The project developer should submit a Grant Application Form to the REA together with the pre-feasibility study and draft business plan in order to get a provisional reply from REA on the indicative amount that could be available for the project. 
These three documents are considered to be "the project package" submitted by the Project Developer in order to grant access to financial support by REA.

        Key facts 
  Prerequisites / Conditionalities:An application for grant may be submitted from a Project Developer meeting the following criteria:
The Project Developer could be a sole proprietorship, partnership, corporation, non-profit entity, cooperative, community based organization or a joint venture, legally registered, incorporated, or existing in accordance with the Laws of the United Republic of Tanzania;
 	The Project Developer should not have been “blacklisted” by the Government of the United Republic of Tanzania for any reason whatsoever; and 
 	The Project Developer should not have been declared bankrupt and should not have a history of mediation, arbitration or litigation relating to fraudulent business transactions.
 
  Cost:
  Duration:
  Competent Authority:
  Issuing Authority:

              Required/Supporting Documentation:
            
Business Plan [Template]
Pre-feasibility Report [Template]
Grant Application Form [Template]
                
                    Preliminary Evaluation of Grant Application
                
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              Required/Supporting Documentation:
            
                    Receipt of the Grant application and designation of a Project Manager
                
Following the receipt of the project package, REA sends a pertinent letter of receipt to the Project Developer, separates the Grant Application form from the package and sends it to the Grant Award Committee, whereas the pre-feasibility report and Draft Business Plan are sent to the designated Project manager. 

The Project manager is considered to be responsible for the appraisal of the pre-feasibility and the draft business plan; he/she is expected to submit recommendations to the Director General and the Grant Award Committee, if any.

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                    Recommendations on support or rejection of the application for grant
                
Recommendations will be given by the Project Manager to support the project or, alternatively, to reject the project as not eligible for the REA. 
If the recommendation is to reject the project, then the Grant Application form will be sent back to the Project Developer together with a letter from the REA explaining the reasons behind the decision. 
If the recommendation is to support the project, the Grant Award Committee will process the Grant Application and recommend the level of support that should be granted. A letter informing the Project Developer about the provisional acceptance and the indicative amount of the grant will be sent by the REA.

        Key facts 
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              Required/Supporting Documentation:
            
                    Feasibility Report and Business Plan
                
Following the provisional acceptance and indicative grant amount from the REA, the Project Developer should proceed with preparing the feasibility report. A feasibility study using the REA template is expected to determine the project’s technical, economic, financial, social, environmental and operational viability. The feasibility study will delve into more detail compared to the pre-feasibility study and is expected to contain the detailed engineering designs and updated costing and financial information.  

In preparing and undertaking the feasibility report the Project Developer should consider the following:
If the project is non-financially viable without grant support (i.e. having a Financial Internal Rate of Return (FIRR) less than the project’s WACC) but otherwise viable, the Project Developer may apply for a grant from the REA/REF. 
 	A Project Developer can apply for grants for co-financing of the capital cost of a project (Performance Grant). In addition, the Project Developer may apply for a grant to co-finance the cost of preparation of a project (Matching Grant). 

The Project Developer needs to update the Business Plan based on the feasibility study, once completed.

        Key facts 
  Prerequisites / Conditionalities:The maximum amount that can be applied for is 80% of the capital cost of a project. In addition, the project developer may apply for a support of up to 50 % of project preparation costs but maximum USD 50,000), e.g. for taking a project from pre-feasibility to feasibility stage. 
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  Duration:
  Competent Authority:
  Issuing Authority:

              Required/Supporting Documentation:
            
                    Final Evaluation of Grant Application
                
Following the screening and ranking, the REA will summarise the results of the appraisal in a standard evaluation form and
     Recommend to the Rural Energy Board (REB) if the project should be supported;
            Recommend the level of grant.

If authorization for support to the project is obtained from the REB, this will be communicated to the Project Developer and information will also be published in newspapers and on REA’s website.
   
         A document detailing the results of the financial, legal, economic, technical and environmental appraisal will form part of the contract between the REA and the project developer.

        Key facts 
  Prerequisites / Conditionalities: 
  Cost:
  Duration:up to 2 weeks
  Competent Authority:REA
  Issuing Authority:

              Required/Supporting Documentation:
            
                    Disbursement
                
The disbursement of the financial
support is planned to be executed by the Trust Agent. The time frame for
disbursements will be specified in each individual contract. Investments in
innovative pilot and demonstration projects and applications for renewable
energy can be made when development partners make special purpose funds available
for that purpose. 

The REA will monitor that the work by the Project Developer
proceeds timely and on budget and that the resulting infrastructure is operated
and maintained in a sustainable manner to meet the public good objectives. 

The REA will verify the documentation, and has the right to
undertake or commission site inspections for verification purposes.

        Key facts 
  Prerequisites / Conditionalities: 
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              Required/Supporting Documentation:

Key facts
Prerequisites / Conditionalities:	The concept note for the project has been approved by REA Only projects which are non-financially viable without capital support but otherwise viable shall be eligible to receive capital support from REA
Cost:
Duration:
Competent Authority:
Issuing Authority:
Required/Supporting Documentation:	Pre-feasibility Study [Template] Draft Business plan [Template]

Key facts
Prerequisites / Conditionalities:	An application for grant may be submitted from a Project Developer meeting the following criteria: The Project Developer could be a sole proprietorship, partnership, corporation, non-profit entity, cooperative, community based organization or a joint venture, legally registered, incorporated, or existing in accordance with the Laws of the United Republic of Tanzania; The Project Developer should not have been “blacklisted” by the Government of the United Republic of Tanzania for any reason whatsoever; and The Project Developer should not have been declared bankrupt and should not have a history of mediation, arbitration or litigation relating to fraudulent business transactions.
Cost:
Duration:
Competent Authority:
Issuing Authority:
Required/Supporting Documentation:	Business Plan [Template] Pre-feasibility Report [Template] Grant Application Form [Template]

Key facts
Prerequisites / Conditionalities:	The maximum amount that can be applied for is 80% of the capital cost of a project. In addition, the project developer may apply for a support of up to 50 % of project preparation costs but maximum USD 50,000), e.g. for taking a project from pre-feasibility to feasibility stage.
Cost:
Duration:
Competent Authority:
Issuing Authority:
Required/Supporting Documentation: