DEPARTMENT OF ENERGY ENERGY UTILIZATION MANAGEMENT BUREAU

Manuals and Guidelines

for

Implementation and Monitoring

of

Renewable Energy Projects in Rural Electrification

June 2009

Through the Project on “Sustainability Improvement of Renewable Energy Development for Village Electrification in the Philippines” under technical assistance of Japan International Cooperation Agency (JICA), this manual was developed by the Department of Energy (DOE) reviewing the “Manual for Micro-hydropower Development in March 2003.

Manuals and Guidelines

for Implementation and Monitoring of Renewable Energy Projects

in Rural Electrification

G-1 Manual for Implementation and Monitoring of Renewable

Energy-based Electrification Projects G-2 Guideline for Monitoring and Management of Renewable

Energy Projects for Rural Electrification

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DEPARTMENT OF ENERGY ENERGY UTILIZATION MANAGEMENT BUREAU

MANUAL

for

Implementation and Monitoring

of

Renewable Energy-based Electrification Projects

June 2009

G – 1

This manual was developed by the Department of Energy (DOE) through the technical assistance under the Project on “Sustainability Improvement of Renewable Energy Development for Village Electrification in the Philippines” which was provided by the Japan International Cooperation Agency (JICA).

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TABLE OF CONTENTS

1 INTRODUCTION ..................................................................................... 1

1.1 PROGRAM DESCRIPTION....................................................................................1 1.2 OBJECTIVE OF THE MANUAL .............................................................................1 1.3 APPLICABLE PROJECTS.....................................................................................2 1.4 INTENDED USERS.................................................................................................2

2 PROJECT FUNDS................................................................................... 3

2.1 ALLOCATION OF FUNDS .....................................................................................3 2.2 BUDGET FOR RE-BASED ELECTRIFICATION PROJECT ................................3

3 ROLES AND RESPONSIBILITIES OF STAKEHOLDERS................... 4

3.1 DEPARTMENT OF ENERGY (DOE)......................................................................4 3.2 AFFILIATED RENEWABLE ENERGY CENTER (AREC).....................................4 3.3 MUNICIPAL LOCAL GOVERNMENT UNIT (M - LGU) .........................................5 3.4 BARANGAY GOVERNMENT UNIT (B - LGU) ......................................................5 3.5 BARANGAY POWER ASSOCIATION (BAPA).....................................................6 3.6 PROJECT BENEFICIARIES ..................................................................................6 3.7 RE SUPPLIER/CONTRACTOR .............................................................................6

4 REQUIREMENTS OF PROJECT APPROVAL...................................... 7

5 PROJECT PROCEDURES ..................................................................... 8

5.1 PROJECT PREPARATION STAGE ......................................................................8 5.1.1 IDENTIFICATION OF TARGET BARANGAYS............................................8 5.1.2 CONDUCT OF RAPID RURAL APPRAISAL (RRA)....................................8 5.1.3 SITE RECONNAISSANCE OF RE RESOURCES ......................................9 5.1.4 CONDUCT OF SOCIAL PREPARATION ..................................................10 5.1.5 PROJECT DESIGN AND PROPOSAL DEVELOPMENT .........................10 5.1.6 SECURING OF RESOLUTIONS................................................................10 5.1.7 PROPOSAL EVALUATION AND APPROVAL ..........................................11 5.1.8 PROJECT AGREEMENTS.........................................................................11

5.2 PROJECT IMPLEMENTATION STAGE..............................................................11 5.2.1 PROCUREMENT OF CONTRACTOR/SUPPLIERS.................................11 5.2.2 BAPA FORMULATION AND BAPA TRAINING.........................................12 5.2.3 SUPERVISION AND MONITORING OF PROJECT IMPLEMENTATION13 5.2.4 COMMISIONING OF RE SYSTEM ............................................................13 5.2.5 TRANSFER OF OWNERSHIP ...................................................................14

5.3 PROJECT OPERATION STAGE .........................................................................14 5.3.1 MONITORING OF PROJECT OPERATION..............................................14 5.3.2 ASSISTANCE FOR PROJECT REHABILITATION ...................................14

6 AMMENDMENT OF THE MANUAL..................................................... 16

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LIST OF ANNEXES

ANNEX 1 : Outline of Project Proposal ANNEX 2 : Sample of Memorandum of Agreement ANNEX 3 : Model Contract For Service ANNEX 4 : Model Deed of Donation

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1 INTRODUCTION

1.1 PROGRAM DESCRIPTION

In 1960, the Government of the Philippines first enunciated total electrification as a national policy objective. The Government adopted the area coverage basis for attaining total electrification. Consistent with this strategy, the Government has already achieved 100% municipality level electrification.

Recognizing the contribution of electrification to rural development, the energy sector through the Department of Energy (DOE) launched the O’Ilaw Program in 1998 to accelerate barangay level electrification. Now, the O’Ilaw was reformed to the Expended Rural Electrification (ER) Program to achieve 100% barangay level electrification by the year 2009 and 90% household level electrification by the year 2017. As a result of the efforts of governmental and private stakeholders, the barangay level electrification rate reached approximately 94.6% as of November 2006, and 2,274 barangays are still to be energized. One of the main components of the ER Program is the DOE-Funded Barangay Electrification Program (BEP). The BEP targets the electrification of barangays wherein Renewable Energy (RE) systems are found to be feasible. Among the technologies to be installed are solar home systems, solar battery charging stations, micro-hydro systems, wind energy and RE hybrid systems Aside from the BEP, many foreign funded projects have been implemented for rural electrification with installation of RE systems. However, many of the RE projects have not been sustainable because of inconsistent approaches and procedures. Now, sustainability of the existing RE systems is a big issue in rural electrification. Thus, consistent approach and procedures are required to implement sustainable RE-based electrification projects. And also, rehabilitation of existing RE systems has become an important role to achieve total electrification in the country and effectively utilize the limited funds and resources.

1.2 OBJECTIVE OF THE MANUAL This Manual has been developed to provide harmonized procedures to be implemented by DOE for new development and rehabilitation of off-grid RE electrification projects. It provides responsibilities of stakeholders, requirements for project approval as well as procedures of project formulation, implementation and monitoring.

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1.3 APPLICABLE PROJECTS This Manual is primarily applied to projects under the DOE’s BEP but it is not limited to. In consideration of consistent approaches and procedures, this manual can be applied to all RE-based electrification projects in the Philippines.

1.4 INTENDED USERS

The intended users of this Project Implementation Manual are primarily the following: Department of Energy; Affiliated Renewable Energy Centers (ARECs).

The intended users should understand the contents of this manual and comply with this manual. In order to implement projects complying with this manual, REMB shall coordinate with the following stakeholders and let them understand their own responsibilities: Project Proponents (Local Government Units (LGUs)); Barangay Power Associations; Private Companies/Suppliers; Project Consultants; and Other Stakeholders

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2 PROJECT FUNDS 2.1 ALLOCATION OF FUNDS

The DOE and other stakeholders should bear the project funds respectively in order to maximize the limited funds for total electrification in the country. The standard allocation of the funds is as follows: DOE:

The DOE is the main resource agency to provide funds for RE-based electrification projects in case of the BEP.

Municipal LGUs: Municipal LGUs shall shoulder part of project costs, and also for social preparation, Barangay Power Association (BAPA) formulation and BAPA training.

Barangay LGUs: Barangay LGUs shall also shoulder part of project costs, such as for hauling materials and labors, whether in cash or in kind.

Beneficiaries: Beneficiaries shall shoulder costs for house wiring and wattmeter/part of battery to individually connect to the system. After installation of systems, beneficiaries shall pay monthly charges for system operation and future replacement of equipment.

Financial contribution by provincial governments and other agencies is welcome to reduce DOE’s funding obligation for the project implementation. As for financial support during the operation stage of the projects, such shall be discussed and established during the coordination meetings on Memorandum of Agreement (MOA) among the stakeholders.

2.2 BUDGET FOR RE-BASED ELECTRIFICATION PROJECT In consideration of the following previous experiences and characteristics of target areas, review of budget for RE-based electrification projects is required: Because of budget limitation, most of previously installed RE systems

were unreliable in quality and durability for long term operation, Since target areas to be energized from now on are isolated and far from

the existing grid lines, backup power cannot be expected for long time in case of system suspension.

The DOE shall review project costs for RE-based electrification from time to time to secure required quality of the systems for sustainable operation, and also request for necessary budget according to an annual plan for rural electrification.

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3 ROLES AND RESPONSIBILITIES OF STAKEHOLDERS The DOE and the related stakeholders shall be responsible for the well-coordinated implementation of the project. Below are the general roles and responsibilities of the stakeholders in RE-based electrification projects:

3.1 DEPARTMENT OF ENERGY (DOE)

a) Identify target barangays and project sites; b) Coordinate with related Local Government Units (LGUs) for necessary

arrangement for the electrification projects; c) Conduct Rapid Rural Appraisal (RRA) on the identified sites; d) Provide technical expertise to Project Proponents in project proposal

preparation in cooperation with Affiliated Renewable Energy Center (AREC);

e) Evaluate the project proposal and forward it to the Office of the Secretary for Secretary’s approval;

f) Prepare and conclude a Memorandum of Agreement (MOA) between DOE and Project Proponent;

g) Assist LGUs and ARECs in social preparation; h) Confirm capability of Barangay Power Association (BAPA) established; i) Take procedures for release of fund for project implementation; j) In case of Solar PV projects,

Prepare Terms of Reference for bidding documents; Conduct bidding and conclude contracts of implementation of the

projects; k) Conduct technical supervision/monitoring of project implementation

directly and/or through ARECs; l) Conduct commissioning test of the installed systems; m) Monitor the project operation through LGUs and ARECs; n) Update a database of RE projects; o) Assist in rehabilitation of the systems technically and financially;

3.2 AFFILIATED RENEWABLE ENERGY CENTER (AREC)

a) Provide technical assistance to project proponents in preparation of project

proposals; b) In case of Micro-hydro projects, as project implementers:

Conduct planning and designing of RE systems; Prepare and submit project proposals; Procure materials and mobilize laborers for the construction; Supervise construction and installation of the system; Prepare Operation and Maintenance (O&M) guide/manual; Conduct training of operators on O&M;

c) Provide assistance to LGUs in the following social preparation activities: Consultation meeting in communities;

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Formulation/organization of BAPA; BAPA officers training;

d) Monitor the performance of implementers during construction and installation;

e) Monitor the performance of RE systems and periodically report to the DOE;

f) Provide technical assistance in operation and maintenance of the RE systems.

3.3 MUNICIPAL LOCAL GOVERNMENT UNIT (M - LGU)

a) Request the DOE for electrification projects b) Provide assistance to DOE in the conduct of RRA; c) Coordinate with barangays and beneficiaries for involvement in the

electrification projects; d) Issue municipal resolution in support to the project and specifying its

counterpart obligation; e) Conclude MOA on project implementation with the DOE and other

stakeholders; f) Designate a permanent municipal staff who will be responsible for

coordination, supervision and monitoring for the projects; g) Prepare and provide counterpart funds and personnel to the Project; h) Ensure necessary right-of-way and other permission i) Coordinate with Barangay LGU (B-LGU) and beneficiaries for the timely

delivery of the required counterpart contribution in cash and/or in kind; j) Conduct consultation meetings with B-LGUs and beneficiaries for BAPA

Formulation; k) Facilitate BAPA formulation/organization l) Conduct BAPA officers’ training m) Regularly submit to the DOE the required Project Status Report during its

implementation; g) Monitor the performance of RE systems and periodically report to the

DOE through ARECs; h) Provide technical and financial assistance, if necessary, in operation and

maintenance of the RE systems; i) Provide assistance in application of livelihood components, if available.

3.4 BARANGAY GOVERNMENT UNIT (B - LGU)

a) Request the corresponding M-LGU for electrification projects b) Provide assistance to DOE in the conduct of RRA; c) Coordinate with beneficiaries for involvement in the electrification

projects; d) Isuue barangay resolution in support to the implementation of the project

and specifying its counterpart obligation; e) Provide counterpart contribution in cash and/or in kind;

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f) Establish BAPA for management of the RE system in cooperation with M-LGUs;

g) Mobilize local labor for construction/installation of the RE systems; h) Provide assistance in BAPA management; i) Install livelihood components to generate additional income, if available.

3.5 BARANGAY POWER ASSOCIATION (BAPA)

a) Formulate and implement rules and regulations of BAPA, which shall be

binding for the entire management system; b) Conduct consultation and dialogue with beneficiaries c) Decide tariff rate and other necessary fees; d) Designate necessary BAPA officers; e) Operate and maintain the RE system, and supply electricity to consumers

efficiently and safely f) Patrol distribution lines and house connections to avoid improper use of

electricity; g) Collect electricity tariffs, and manage income and expenditure h) Repair or replace facilities and equipment, if necessary i) Instruct consumers on guidelines for safe and efficient usage of electricity j) Periodically report the results of O&M and financial management to LGUs

3.6 PROJECT BENEFICIARIES

a) Provide the required counterpart to the Project, such as right-of-way and

labor force; b) Shoulder his/her own costs for balance of system (house wiring,

wattmeter, battery etc.); c) Properly use electricity complying with the rules and regulations of the

BAPA; d) Regularly pay the appropriate tariff and fees for the services provided

from the RE system. e) Observe the BAPA management and make recommendation on BAPA

management. 3.7 RE SUPPLIER/CONTRACTOR

a) Supply and install qualified RE systems for the projects as specified; b) Undertake the commissioning of the RE systems; c) Provide required trainings to operators and local technicians on the

operation, repair and maintenance of the RE systems; d) Provide user training to the project beneficiaries.

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4 REQUIREMENTS OF PROJECT APPROVAL

In order to attain sustainability of RE systems, minimum requirements should be fulfilled. The following are the minimum requirements for project approval: a) Request from B-LGU accompanied with Barangay resolution expressing

their willingness to provide counterpart contribution to the project; b) Request from M-LGU accompanied with Municipal resolution, which

commits its counterpart contribution to the project; c) Data and information for RE resource assessment and for demand

assessment including social conditions; d) Appropriate project plan; e) Adequate cost estimates of construction/installation of RE systems of the

project; f) Other criteria of project evaluation, which will be set by the DOE;

Prior to approval of the project implementation, the DOE shall confirm if all requirements are attached to project proposal.

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5 PROJECT PROCEDURES 5.1 PROJECT PREPARATION STAGE

5.1.1 IDENTIFICATION OF TARGET BARANGAYS

The DOE’s Barangay Electrification Program (BEP) shall prioritize the electrification of barangays listed under the Missionary Electrification Development Plan (MEDP) for RE electrification. The minimum criteria in the finalization of the list of BEP target barangays are the following: Approval of the sites by the DOE-EPIMB; No extension plan of distribution line to the target area in five (5) years; RE system is the least cost option (has the lowest net present cost) in the

electrification of the site.

5.1.2 CONDUCT OF RAPID RURAL APPRAISAL (RRA)

5.1.2.1 PREPARATION OF RRA The purpose of RRA is to assess the socio-economic conditions and to identify the available indigenous energy resources and appropriate energy technologies in the area. The basic information to be derived from this activity shall be used to determine the most suitable financing, repayment and implementation schemes. Prior to conducting the RRA, questionnaire forms for social surveys should be prepared in advance. The questionnaire forms are provided in “Guide on BAPA Formulation and BAPA Management for Rural Electrification utilizing Renewable Energy”, which was separately prepared. Also, location of barangays to be visited should be checked in advance using 1/50,000 topographic maps and information from related agencies.

5.1.2.2 COORDINATION WITH LGUs This activity includes meetings with the concerned M-LGU, B-LGU and Rural Electric Cooperative (REC) officials with the following agenda, among others:

1. DOE’s BEP, 2. Electricity needs of beneficiaries 3. Potentials of RE systems for Rural Electrification 4. Requirements for approval of the project implementation Counterparts of the LGUs and beneficiaries Municipal and Barangay Resolution

5. Possibility of REC’s supports to the project 6. Contents and schedule of RRA 7. Primary and secondary data to be gathered

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This activity is generally the first visit to the community. It is expected that during this stage, the interests and preliminary approval of the LGUs and the barangay folks regarding the off-grid RE-based electrification have already been established. This activity shall also serve as a venue for negotiation to get the necessary counterpart funding/contribution for the project from the LGUs, project beneficiaries and other potential fund sources. It will be assumed that the RRA report will indicate that the off-grid RE-based electrification project is feasible in the barangay. In case that the minimum counterpart is not available during the current year, the M-LGU shall issue an official communication to the DOE citing that it can not presently provide the required minimum counterpart, therefore, it is amenable that the project will only be prioritized by the DOE once the M-LGU has the capacity to provide the said counterpart.

5.1.2.3 SOCIO-ECONIMIC AND DEMAND SURVEY

Aside from information from the LGUs, the household survey will be done to collect socio-economic data. For the household survey, a minimum of ten (10) households in each target barangay shall be required as samples. The results of said surveys shall be encoded in the database which will be made specifically for this purpose for analysis and easy access in the future. According to the socio-economic data, electricity demand of the barangay shall be estimated.

5.1.2.4 INDIGENOUS ENERGY RESOURCE IDENTIFICATION

To consider eligibility and sustainability of rural electrification projects, extension of grid is the most preferable. However, because of financial limitation, the extension of grid cannot always be assured. So, least cost option shall be selected for barangay electrification. If the targeted electrification area is more than 4 km away from the existing grid line, indigenous renewable energy resources shall be adopted. Micro-hydropower is considered as the first option of indigenous energy source for barangay electrification. During the RRA, it is checked whether or not there is potential for hydropower resources near the barangay, which would satisfy with the power demand of the barangay. If there is insufficient hydropower potential, solar PV is the next option of indigenous energy source for electrification. It shall also be confirmed with LGUs if the electrification option is acceptable or not.

5.1.3 SITE RECONNAISSANCE OF RE RESOURCES In case that micro-hydropower is selected as an energy source for barangay electrification, further detailed data and information is needed for planning, designing and cost estimation of the project in order to proceed to next steps of project preparation.

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The detailed contents and methodology of the site reconnaissance of micro-hydropower development are referred to “Guide on Micro-hydro Development for Rural Electrification” and “Manual for Micro-hydropower Development”.

5.1.4 CONDUCT OF SOCIAL PREPARATION As the second or third visit to the community, social preparation is conducted at the target barangay. Though this activity shall basically be done under the responsibility of LGUs, LGUs cannot normally conduct it alone because most of LGUs have no expertise to do it. Therefore, the DOE and/or ARECs shall assist the LGUs in facilitating social preparation activities. The contents and methodology of social preparation are referred to “Guide on BAPA Formulation and BAPA Management for Rural Electrification utilizing Renewable Energy”. During the social preparation activities, LGUs will be requested to provide of municipal and barangay resolutions for the project as a requirement for the project approval. Those resolutions shall be endorsed to the DOE.

5.1.5 PROJECT DESIGN AND PROPOSAL DEVELOPMENT Project planning and designing shall be done in consideration of the results of the RRA and site reconnaissance conducted in the target area. Energy demand, willingness to accept the project and the availability of indigenous energy resources shall be the primary considerations in the design of appropriate technology and implementation scheme which will be proposed for a particular area. For the purpose of project design, the existing guideline and manuals shall be adopted, such as “Manual / guideline for design, implementation and management for PV system” for solar PV, “Guide on Micro-hydro Development for Rural Electrification” and “Manual for Micro-hydropower Development” for micro-hydropower. Project proposal shall primarily be developed by Municipal LGUs for solar PV and by ARECs for micro-hydro as implementers. However, since LGUs have insufficient expertise on project design and project formulation on renewable energy, the DOE shall prepare project proposal on behalf of LGUs especially for solar PV projects in coordination with LGUs. The suggested outline of the Project Proposal is provided in ANNEX 1 “Outline of Project Proposal”.

5.1.6 SECURING OF RESOLUTIONS

Municipal and Barangay resolutions for requesting and accepting the electrification project shall be essential requirements for project approval.

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Municipal LGUs shall secure resolutions from Sangguniang Bayan and Sangguniang Barangay, and submit them to the DOE.

5.1.7 PROPOSAL EVALUATION AND APPROVAL The Renewable Energy Management Bureau (REMB) of the DOE shall conduct technical review and evaluation of the proposed RE-based electrification projects. The REMB shall technically and financially evaluate if the project proposals are appropriate and feasible from viewpoints of sustainability of the projects. Commitments of counterpart funds and required resolutions are one of the key points for project endorsement. Reviewed proposals shall be endorsed to Secretary of the DOE for approval through the Director of Energy Utilization Management Bureau (EUMB).

5.1.8 PROJECT AGREEMENTS

Prior to the project implementation, Memorandum of Agreement (MOA) shall be concluded between the DOE, LGU. In case that some other parties provide financial and/or technical assistance to the project, the stakeholders shall also be included in the MOA as stakeholders. The MOA is a legal document, which specifies the respective obligations of each contracting party. The agreements shall specify, among others, the following:

Roles and responsibilities of each contracting party; Project funds – itemized as to funds source; Scope of the Project; Duration and schedule of activities; Effectivity of the Project Agreement; Ownership of the RE systems, and; Other provisions necessary for the Project.

The model MOA is provided in ANNEX 2 “Format of Memorandum Of Agreement”. Once the MOA is concluded among stakeholders, the MOA shall strictly be implemented. For the purpose, roles and responsibilities of stakeholders shall be clearly specified in the document.

5.2 PROJECT IMPLEMENTATION STAGE 5.2.1 PROCUREMENT OF CONTRACTOR/SUPPLIERS

In case of solar PV projects funded by the DOE, the DOE shall institute the Contracted-Out Services Approach as the mode of implementation for turnkey DOE Funded Barangay Electrification Project. The general procedures and

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guidelines for the implementation of the Barangay Electrification Project under the said approach are as follows: DOE shall employ the supplier/contractor through a public bidding for the supply of the required goods and services for the Project. These goods and services may include, among others:

RE equipment, Installation services, and Other project related services, i.e., conduct of the required technical

training.

The procedures for the procurement of the services of a supplier/contractor shall be governed by the GAAM rules and regulation (GAAM Volume 1, Title 7, pages 248 to 304) A Contract for Services (CFS) shall be undertaken by and between the winning bidder/supplier of the required goods and services and the DOE. The model CFS is provided in ANNEX 3 “ Model Contract For Services”. The CFS shall be executed by and between the DOE and the winning supplier/contractor. A Performance Bond and/or Surety Bond shall be posted by the winning supplier/contractor and shall be released upon completion of the project to guarantee for failure of the project or any other damages.

As much as possible, the DOE requires the winning supplier/contractor to locally sourced out his manpower requirement during the construction and installation of the RE systems.

5.2.2 BAPA FORMULATION AND BAPA TRAINING

BAPA formulation is a key component of project implementation of RE rural electrification to ensure sustainability of RE system operation. Municipal LGUs shall take a role of facilitator and responsibility for these activities. This BAPA formulation shall basically be followed with “Guide on BAPA Formulation and BAPA Management for Rural Electrification utilizing Renewable Energy”. In order to formulate BAPA more effectively and practically, local culture of the target areas shall be taken into consideration. BAPA Training is divided into two; one is managerial training and another is technical training:

(1) BAPA Managerial Training This training is targeting to BAPA officers and its members. The training should cover the followings as a minimum:

a) Basic management principles and practices b) Basic accounting and auditing procedures c) Bookkeeping

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d) Technical Reporting e) Operation and maintenance of the household component of the RE

system f) Load management g) Safety precautions on the use of the RE system

(2) BAPA Technical Training

This training is targeting to BAPA Operators & Technicians. The training shall cover the followings as minimum:

a) Basics of electricity b) Basics of RE technology used by the Project c) Operation and Maintenance Principles and Practices d) Troubleshooting e) Technical Reporting f) Repair and Maintenance Procedures g) Performance test h) Load management i) Warranties j) Safety precautions on the use of the RE system k) Procedures in the acquisition of technical assistance on repair and

maintenance.

5.2.3 SUPERVISION AND MONITORING OF PROJECT IMPLEMENTATION

The DOE shall supervise and monitor the implementation of the projects by itself and/or through ARECs. The DOE through REMB shall send its staff and ARECs’ staff to the project sites to instruct the contractors/suppliers to install RE system in accordance with specifications, and coordinate with local LGUs to avoid any conflict between the contractors/suppliers and local residents. The DOE will also tap the services of the concerned M-LGU to act for the conduct of other project related activities such as community organizing and other social preparation activities, on-site project monitoring and project management at the local level in accordance with the MOA. The counterpart funding from LGUs, congressional districts, barangay, beneficiaries and other counterpart agencies shall be deposited into a trust account for the project and will be used for the conduct of the said activities.

5.2.4 COMMISIONING OF RE SYSTEM

Commissioning of the RE system shall be done by contractors/suppliers or ARECs. Contractors/suppliers or ARECs shall issue a letter of completion to the DOE requesting for commissioning inspection by the DOE. The DOE shall send REMB staff for the commissioning inspection. The REMB staff shall conduct visual inspection and test operation to check if the system is completed as

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specified. Once the REMB confirmed the system is acceptable for operation, the REMB shall issue a Certificate of Completion. Contents and methods of completion inspection are provided in “Site completion test manual for Micro-hydropower Project” and “PV Project evaluation guideline”.

5.2.5 TRANSFER OF OWNERSHIP

Once the RE system has completed, the ownership of the system shall be transferred from the DOE to Municipal LGUs. This is subject to approval of the DOE. The criteria of the DOE’s approval are as follows:

a) Completion of construction and installation of the RE system as specified; b) Formulation of eligible BAPA for the system operation; c) M-LGU’s commitment for continuous operation and maintenance of the

system; d) Certificate of Completion issued by the DOE.

For the official transfer of ownership, the DOE issues “Model Deed of Donation” (see ANNEX 4). After the procedures, all ownership as well as all responsibility of the system operation and maintenance shall be transferred from the DOE to M-LGUs.

5.3 PROJECT OPERATION STAGE 5.3.1 MONITORING OF PROJECT OPERATION

One of the DOE’s major tasks for RE-based electrification is not only installation but also monitoring of the existing systems. The DOE through the REMB shall monitor the existing RE systems by itself and/or through ARECs, and update its database. The REMB shall evaluate the monitoring results annually, and report it to Secretary of Energy. The evaluation results shall be reflected to next year’s RE policy, activities and budget. The methodology of monitoring of RE systems and its management is provided with “Monitoring and Monitoring Management of Renewable Energy Projects for Rural Electrification”.

5.3.2 ASSISTANCE FOR PROJECT REHABILITATION

Looking at the current situation of existing RE systems for rural electrification, rehabilitation of such systems is also required to achieve total electrification by household level.

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The DOE shall request for annual budget for rehabilitation of RE system as part of Barangay Electrification Program (BEP) Fund, but not limited to. The annual budget shall includes not only reconstruction and reinstallation costs but also monitoring and inspection costs by the REMB and/or ARECs. Identification of rehabilitation sites shall be made based on results of annual evaluation of monitoring data of the existing RE systems for rural electrification. The procedures of rehabilitation projects are basically the same as the ones of newly implemented RE-based electrification projects mentioned above.

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6 AMMENDMENT OF THE MANUAL The DOE shall review this manual annually, and amend it, if necessary, according to the surrounding circumstances in rural electrification of the country. The amended manual shall be fully authorized among the DOE and approved by Director of Energy Utilization Management Bureau of the DOE.

ANNEX 1 : Outline of Project Proposal

ANNEX 1. OUTLINE OF PROJECT PROPOSAL (INFORMATION REQUIRED)

I. Project Title II. Introduction

III. Project Objectives

IV. Project Description

V. Project Strategies and activities

a. Conduct of Rapid Rural Appraisal b. Social preparation c. Conduct of Community Organizing d. Project Implementation e. Conduct of training for local technicians and end-users f. Impact assessment g. Project evaluation h. Funding source

VI. Project Site/Beneficiaries (brief description of the site, socio-economic profile,

RRA and resource assessment results) VII. Project Financing (description of the funds sources – DOE, LGU, Project

Implementor, other project players)

VIII. Project Cost (Detailed Budgetary Requirements)

IX. Work Plan

X. Implementation Arrangements (Proposed role of each project players)

ANNEX 2 : Sample of Memorandum of Agreement

ANNEX 3 : Model Contract For Service

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ANNEX 3. MODEL CONTRACT FOR SERVICES

CONTRACT FOR SERVICES

This CONTRACT FOR SERVICES ON THE BARANGAY ELECTRIFICATION PROJECT entered into this _____ day of _____________ 2004 at Fort Bonifacio, Taguig, Metro Manila, Philippines by and between:

The DEPARTMENT OF ENERGY, a government agency created pursuant to law with principal office at Merritt road, Fort Bonifacio, Taguig, Metro Manila, Philippines, represented herein by its Secretary, Hon. ANGELO T. REYES, hereinafter referred to as the “DOE”,

-and-

The_________________________________,a private corporation

duly organized and existing in accordance with the laws of the Republic of the Philippines, with office address at _________________________________________, represented herein by its President_______________________hereinafter referred to as the “CONTRACTOR”.

WITNESSETH: THAT

WHEREAS, the DOE in response to the call of the President for the upliftment of the quality of life of the marginalized sector, has developed its program entitled “O ILAW” which aims to provide energy services to rural households in off-grid areas where extension of electricity distribution lines is economically not feasible; WHEREAS, the National Electrification Administration (NEA) has identified around 1,400 unelectrified barangays which can be electrified by utilizing renewable energy technologies; WHEREAS, a project team composed of technical staff from the DOE, ANEC and LGU conducted a rapid rural appraisals in several unelectrified barangays in (name of municipality) to gather socio-economic, energy demand, and renewable energy supply information involving barangay households in order to determine the most techno-economically viable renewable energy technology options in providing electricity supply for at least (no. of barangays to be electrified) barangays;

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WHEREAS, the LGU of (name of Municipality) , following the result of the survey, has submitted a proposal for the off-grid electrification of has requested the assistance of the DOE for the electrification of Barangays (Barangays to be electrified) in (municipality & province) under DOE’s O ILAW Program;

WHEREAS, a public bidding was conducted for the purpose of identifying a contractor who can best provide the necessary expertise and the CONTRACTOR, having satisfied the DOE’s technical requirements, tendered the lowest bid and offered the most reasonable cost structure of _______________________________________________ Pesos (P_________) with corresponding output of an installed (type of RE systems) and provide the after-sales service;

WHEREAS, the DOE has awarded this project and contract to the

CONTRACTOR;

NOW THEREFORE, for and in consideration of the foregoing premises, and of the terms, covenants and stipulations herein below set forth, the parties herein have agreed, as they do hereby agree as follows;

ARTICLE I

SCOPE AND TIMETABLE OF THE PROJECT

Section 1. The CONTRACTOR will conduct and perform the following activities in ________________________________________________________;

a. Supply and install type of RE systems in the barangays name of barangay:

b. Provide after-sales service and warranty for the installed system and for a minimum period of one (1) year..

Section 2. The project must be completed within ten (10) months reckoned from

the date of signing of the contract with the final report to be submitted on or before the end of the 12th month as indicated in the proposal.

Section 3. The reports and supporting documents that the CONTRACTOR shall submit on the contract of the project shall cover the basic technical requirements for a type of RE systems to enable the DOE or its designated party/entity to implement similar projects in the future. These shall also include the recommendations on the implementation scheme, community organizing and conduct of training of technical and users.

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Section 4. The CONTRACTOR shall comply with all the terms and conditions

stipulated in the Term of Reference which is attached to Contract as an integral part hereof.

ARTICLE II

SCOPE OF DOE’S RESPONSIBILITY

Section 1. Whenever necessary, the technical staff of DOE, mainly through its REMD, shall provide overall management and supervision, and extend appropriate technical assistance in carrying out this activity. It shall likewise review and approve draft presentation concept/s prior to finalization and conduct of community organizing, training of technicians and users and installation of the PV system and shall process and secure documents necessary to facilitate the release of funds in accordance with the schedule of payments.

Section 2. The travel, board and lodging expenses of the technical staff from the DOE shall be the responsibility of the DOE. Section 3. The DOE shall have the right to inspect and/or test the Type of RE systems to confirm their conformity to the Contract. Should any inspected or tested RE component fail to conform to the Specifications as stated in the Terms-of-Reference, the DOE may reject them and the Contractor shall either replace the rejected RE component or make all alternatives necessary to meet Specification requirement free of any cost to the DOE.

ARTICLE III

RESPONSIBILITIES AND OBLIGATION OF THE CONTRACTOR

Section 1. The CONTRACTOR shall be responsible for the provision of personnel, facilities, materials and equipment necessary for the satisfactory conduct and completion of the works and activities specified in this Contract.

Section 2. The CONTRACTOR shall install the systems within a period of ten (10) months upon release of the first payment and conduct monthly project monitoring within 0ne (1) year upon commissioning of the system.

Section 3. The CONTRACTOR shall hold the DOE safe and free from any and all liabilities, suit, actions, demands, damages, costs or fees on account of death, injuries to any person or property loss resulting from and caused by the negligent acts or misconduct of the CONTRACTOR.

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Section 4. The CONTRACTOR shall not sub-contract or assign the whole or any

part of this Contract without prior approval of the DOE in writing. Section 5. The CONTRACTOR warrants that the RE components supplied and

installed under the Contract are new and unused factory approved commodities that are free from defects in materials and workmanship and shall issue to the DOE warranty certificate for each commodity delivered.

Section 6. The CONTRACTOR shall guarantee that any defective commodity

shall be replaced with brand new and unused factory approved equivalent and to be delivered at the Contract site at no cost to the DOE within thirty (30) calendar days after receipt of notice from the DOE of such defects.

Section 7. The CONTRACTOR warrants that it shall first secure the DOE’s

written approval prior to making any publicity releases or announcements regarding this project in this Contract.

ARTICLE IV

CONTRACT PRICE AND SCHEDULE OF PAYMENTS

Section 1. The CONTRACTOR shall closely coordinate with the DOE towards the successful accomplishment of the project and the DOE shall make available to the CONTRACTOR, whenever requested and whenever available, relevant materials, information and documents on the NRE technologies.

Section 2. The DOE shall pay the CONTRACTOR the amount of _______________________________________________________ Pesos (P_________) for the conduct of the project entitled _____________________________________________________ in accordance with the following schedule, the release of which however, shall be subject to the existing government accounting and auditing rules and regulations:

Accomplishment

Progress of Payment Date of Payment

Signing of Contract 15% of Contract price equivalent to P_________

Within 30 days upon signing of Contract

Submission of plans for the installation, and training of technicians

75% of Contract Price equivalent to P__________

Within 30 days upon submission of plans for the installation and training of

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and users

technicians and users

Completion of services rendered and result of the DOE’s inspection of project

10% of contract Price equivalent to P________

Within 30 days upon acceptance of Final Report

Section 3. It is understood that all taxes, duties or other legal exactions arising

by virtue of this project and Contract shall be for the account of the CONTRACTOR. The DOE is hereby authorized to deduct and withhold applicable withholding taxes, if any, from any payment of the CONTRACTOR in accordance with legal requirements.

Section 4. All expenses incurred by the CONTRACTOR prior to the signing of the Contract shall be deemed covered by the contract amount. This however, does not include the posting of performance bond and/or surety bond.

Section 5. The CONTRACTOR shall not recover costs incurred in excess of the contract price set forth above and the CONTRACTOR shall not be obliged to undertake additional work beyond the scope of the terms of reference unless and until the DOE shall have approved the request of the CONTRACTOR in writing on the need for additional work.

Section 6. The final payment shall be withheld until the Final Report has been completed to the satisfaction of and accepted by the DOE, and final services, material/s or output/s accomplished according to specification is/are delivered to the DOE.

ARTICLE V

PERFORMANCE BOND

Section 1. To guarantee the faithful performance of the CONTRACTOR under this Contract, he shall post upon the signing of the Contract a Performance Bond in the form of cash, manager’s check, cashier’s check, bank draft/guarantee confirmed by a local bank (in the case of foreign CONTRACTOR bonded by a foreign bank), letter of credit issued by a reputable bank, surety bond, callable on demand, issued by the Government Service Insurance System or by surety or insurance companies duly accredited by the Office of the Insurance Commission, or a combination thereof, in accordance with the following schedule:

1. Cash, manager’s check, cashier’s check irrevocable letter of credit, and bank draft – five prevent (5%) of the total contract price.

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2. Bank guarantee – ten percent (10%) of the total contract price.

3. Surety bond – thirty percent (30%) of the total contract price

Section 2. The Performance Bond shall guarantee the CONTRACTOR’s faithful compliance of its obligations under this Contract including payment of all wages and benefits of its personnel or those employed for their project under the Contract. The Performance Bond shall be released by the DOE sixty (60) days after completion of the services, which have been found acceptable by the DOE as specified under this Contract.

ARTICLE VI

AUTHORITY TO SET OFF

Section 1. It is expressly agreed upon that in the event of breach by the CONTRACTOR of any provision of this Contract DOE shall have the irrevocable authority to automatically set-off and apply, without notice, all funds, credits, money and/or accounts receivable that may be due or owing to the CONTRACTOR.

ARTICLE VII

PROVISION OF PENALTIES

Section 1. The CONTRACTOR shall pay the DOE the amount equivalent to 1/10 of 1% of the contract price for every day of delay in the completion of its services as provided under this contract.

ARTICLE VIII

NOTICE OF UNDERTAKING

Section 1. The CONTRACTOR is aware that the DOE is a government office and as such is subject to certain legal requirements and procedures not normally required of private entities. The CONTRACTOR, nevertheless, agrees that whenever such legal requirements and procedures apply to this Contract and affect its validity, effectively out implementation, this Contract shall be considered amended accordingly so as to enable the DOE to comply with such requirements. For its part, the DOE shall exert its effort to immediately comply with the requirements in a most equitable manner consistent with good faith.

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ARTICLE IX

FORCE MAJEURE

Section 1. Except with respect to which have been completed to the satisfaction of the DOE neither parties shall be responsible to the other for delay or damages for failure to comply with this Contract if such non-compliance was caused by war, declared or not, civil disturbances, acts of God, fire, floods, earthquakes, or any other causes which could not reasonably be controlled by the party claiming force majeure.

Section 2. The Party, which has been interrupted in the performance of its obligations by force majeure, shall use all reasonable means to resume compliance with this Contract as soon as it is feasible.

Section 3. If there occurs an event constituting force majeure, the Party so affected shall give written notice of this occurrence immediately to the other Party or as soon as practicable thereafter, including a statement describing the effect of such occurrence upon the performance of this Contract. In the event the force majeure condition persists such that the completion of the Project and this Contract has become impossible, the Parties may mutually agree on a suspension or termination of this Contract.

ARTICLE X

TERMINATION BY DOE

Section 1. The DOE may terminate this Contract by giving the CONTRACTOR fifteen (15) days prior written notice and in accordance with the following:

a. Whenever the CONTRACTOR defaults or delays in the performance of this Contract in accordance with its terms, including in the term “default” or “delay” any such failure by the CONTRACTOR to make a progress in the prosecution of the work hereunder as endangers such performance and shall fail to cure default or delay, within a period of ten (10) days after receipt from DOE of a notice specifying the default or delay, without prejudice to the right of the DOE to claim appropriate damages to enforce or protect its right against the CONTRACTOR, to forfeit the performance bond, and/or to withhold any payment that may be due or owing to the CONTRACTOR. In addition, the DOE can contract the services of another party to prosecute the work under this Contract and charge the costs of such services against the CONTRACTOR.

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b. Whenever for any reason, DOE shall determine that such termination is in the best interest of DOE, such termination shall be effected by delivery to the CONTRACTOR of a notice of termination and the CONTRACTOR shall be paid for work satisfactorily completed to date of termination.

Section 2. Upon receipt of a Notice of Termination of this Contract under Article X hereof, the CONTRACTOR shall take the proper steps to bring the services to a close in a prompt and orderly manner and reduce expenditures to a minimum.

ARTICLE XI

GENERAL PROVISIONS

Section 1. No modifications of this Contract shall be made except in writing by the Parties.

Section 2. This Contract shall be made under, and shall be governed solely and construed in accordance with the laws of the Republic of the Philippines.

Section 3. As much as possible, disputes between Parties shall be settled amicably. However, in the event that either Party to this Contract shall take judicial action against the other, it is expressly agreed that the venue for purposes of litigation shall be laid exclusively with the proper courts in Makati City having jurisdiction/

ARTICLE XII

QUALITY CLAIMS/WARRANTY CLAUSE

Section 1. The CONTRACTOR hereby warrants that any of its officials or representatives has not given or promised to give any money or gift to any employee/official of the DOE nor has the CONTRACTOR or its official or representatives exerted or utilized any unlawful influence to solicit or secure this Contract through an agreement to pay a commission, percentage, brokerage or contingent fee. The CONTRACTOR hereby agrees that breach of Warranty shall be sufficient ground for Doe to terminate or cancel this Contract, or to deduct such commission, percentage, brokerage or contingent fee from the Contract price without prejudice to the CONTRATOR’s or any other person’s civil or criminal liability under the Anti-Graft Law and other applicable laws.

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Section 2. Any claims relative to hidden defects on workmanship relative to the services performed shall be filed with the CONTRACTOR within fifteen (15) working days from issuance of Certificate of Turnover & Acceptance, otherwise, the Civil works shall deemed fully accepted without recourse. Claims relative to the hidden defects or inherent defects on materials supplied for the supply of goods shall be made against the warranty issued by the manufacturer.

ARTICLE XIII

VALIDITY/SEPARABILITY CLAUSE

Section 1. If any term or condition in this Contract is nullified or rendered void, the other terms and conditions not affected thereby shall remain valid and binding unless the basic and real intentions of the Parties herein cannot be carried out or implemented.

ARTICLE XIV

EFFECTIVITY

Section 1. This Contract shall come to force upon its execution by the Parties herein.

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IN WITNESS WHEREOF, the Parties have caused this Contract to be signed in their respective names as of the day and year first above written. DEPARTMENT OF ENERGY (Name of Company) By: By: _____________________________ ______________________________ Hon. ANGELO T. REYES (Name)

Secretary President

SIGNED IN THE PRESENCE OF:

________________________________ ___________________________________

MARIO C. MARASIGAN WITNESS Director Energy Utilization Management Bureau

________________________________ NORA A. TUAZON

Chief Accountant DOE

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ACKNOWLEDGEMENT REPUBLIC OF THE PHILIPPINES) METRO MANILA ) S.S. BEFORE ME, This ______day of _______, 2003 in Metro Manila, Philippines, personally appeared: NAME COMM. TAX DATE/PLACE CERT. NO. OF ISSUE ______________________ ________________________ ___________________ ______________________ ________________________ ___________________ known to me to be the same persons who executed the foregoing instrument, and they acknowledged to me that the same is their free act and deed and that of the office or entity, which they respectively represent. This instrument consists of ____ (__) pages, including the page on which this acknowledgement is written, and signed, by the Parties executing this instrument and their instrumental witnesses, and sealed with my notarial seal. IN WITNESS WHEREOF, I have hereunto affixed my signature the day, year and place above written. Doc. No. _____ Page No. _____ Book No. _____ Series of 2004

ANNEX 4 : Model Deed of Donation

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ANNEX 4. MODEL DEED OF DONATION

DEED OF DONATION KNOW ALL MEN BY THESE PRESENTS: This DEED OF DONATION made and entered at Address of LGU by and between:

The DEPARTMENT OF ENERGY (DOE), with principal office address at Merritt Road, Fort Bonifacio, Taguig, Metro Manila, herein represented by its Secretary, Hon. ANGELO T. REYES, hereinafter referred to as the “DONOR”,

and

The LOCAL GOVERNMENT UNIT OF Name of Municipality, Province Name

of Province represented by its Mayor, Name of the Mayor, hereinafter referred to as the “DONEE”.

WITNESSETH: THAT

WHEREAS, the Department of Energy has entered into a Memorandum of Agreement with the Project Implementor for the implementation of the Name of the Project on Date the Project Commence; WHEREAS, the Memorandum of Agreement specifically stipulated that the ownership of the Type of RE Systems shall remain under the DOE until the systems are formally donated to the Name of the LGU; WHEREAS, the Project Implementor has already completed the installation of the Type of RE Systems in Barangays Name of the Barangays; WHEREAS, the DOE has found that the Type of RE Systems have been installed in accordance with the design and technical specifications as provided in the approved project proposal; WHEREAS, the Name of LGU has demonstrated its capability to own, maintain and administer the Type of RE Systems; NOW, THEREFORE, for and in consideration of the foregoing, it is hereby agreed that:

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1. The Department of Energy, herein DONOR, hereby TRANSFERS and CONVEYS the ownership of the Type of RE Systems to the Name of LGU, herein DONEE, in which the Type of Systems are particularly described as Description of the Systems, including brand name, etc., each for Barangay Name of Barangays, respectively;

2. The DONEE hereby agrees to maintain and administer the operation of the

Name of Sytems until such time that the Barangay Power Associations (BAPA) of Name of Barangays, created for the purpose of the project, has demonstrated the capability to own, maintain and operate the systems;

3. The DONEE shall have the option to transfer the systems to other unelectrified

barangays within the municipality should the respective BAPAs of Name of the Barangays fail to manage and maintain their systems;

4. The DONEE agrees to engage the services of the Name of ANECs for the

continuing technical services to the BAPAs until such time that the DONEE has decided that such services are no longer needed by the BAPAs;

5. The DONEE, hereby accepts the foregoing donation and hereby expresses its

gratitude for the liberality of the DONOR and hereby agrees to comply with and abide by all the conditions related to the ownership, maintenance and administration of the said Name of systems .

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IN WITNESS, WHEREOF, the DONOR and DONEE have hereunto affixed their

signatures this _______ day of _________________ at the Address.

DEPARTMENT OF ENERGY NAME OF LOCAL GOVERNMENT UNIT

by: by: ANGELO T. REYES NAME OF DONEE Secretary Municipal Mayor

SIGNED IN THE PRESENCE OF: ________________________________ __________________________________ MARIO C. MARASIGAN Name of MPDO Director Municipal Planning and Development Energy Utilization Management Bureau Coordinator (MPDC)

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REPUBLIC OF THE PHILIPPINES ) s.s METRO MANILA )

ACKNOWLEDGEMENT

BEFORE ME, this _____ day of _________________ personally appeared:

ANGELO T. REYES with Community Tax Certificate No. ______________, issued at __________________ on ________________ in his capacity as Undersecretary, Department of Energy, known to me to be the same person who executed the foregoing instrument and he acknowledged to me that the same is his free act and deed and that of the office which he represents.

This instrument which consists of five (5) pages including the page on which this acknowledgment is written has been signed by the above party and his instrumental witnesses on each and every page thereof and sealed with my notarial seal. IN WITNESS WHEREOF, I have hereunto affixed my signature on the day, year and place above written. NOTARY PUBLIC Doc. No. _________ : Page No. _________ : Book No. _________: Series of 2004.

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REPUBLIC OF THE PHILIPPINES ) s.s Name of Province )

ACKNOWLEDGEMENT

BEFORE ME, this _____ day of _________________ personally appeared:

Name of Donee, with Community Tax Certificate No. ______________, issued at ____________________________________ on _____________________________ in his capacity as Mayor, Municipality of Name of Municipality , Province of Name of Province , known to me to be the same person who executed the foregoing instrument and he acknowledged to me that the same is his free act and deed and that of the office which he represents.

This instrument which consists of five (5) pages including the page on which this acknowledgment is written has been signed by the above party and his instrumental witnesses on each and every page thereof and sealed with my notarial seal. IN WITNESS WHEREOF, I have hereunto affixed my signature on the day, year and place above written. NOTARY PUBLIC Doc. No. _________ : Page No. _________ : Book No. _________: Series of 2004.

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Department of Energy

Energy Complex Merritt Road, Fort Bonifacio, Taguig City, Metro Manila

TEL: 840-14-01 to 21 FAX: 840-18-17