Post on 12-Mar-2022
1
Sustainable Island Resource
Framework Fund
OAS / Department of Environment Antigua and Barbuda
Marko Markov, St. John`s, 23 February 2016
2
WHAT IS SIRFF
• Special Fund established under the EPMA
• Independent legal entity*
• Financial framework mechanism
• “Green” funding catalyst
3
WHAT IS THE OPERATIONS MANUAL
• General framework for SIRFF operations
• Governance structure
• Project cycle details
• Risk and Investment policies
• Reporting
• Broad guidelines
• A living document
4
WHAT THE OPERATIONS MANUAL IS NOT
• Fully comprehensive rulebook
• Guarantee for success
• “Silver bullet” for all possible problems
5
SIRFF OPERATING PRINCIPLES
• Independent and autonomous entity
• Clear and firm investment criteria
• Equal opportunity for all applicants
• Protection of A&B`s biodiversity and natural
resources
• Promotion of environmental sustainability
• Transparent reporting
6
SIRFF MAIN FINANCING SOURCES
• International and Bilateral financing institutions
• Donor agencies
• Fees and fines charged under the EPMA
• Protected areas entry fees at and other
ecotourism fees
• Designated funds provided by the Government /
Parliament
• Other – water levies, philanthropy, eco-taxes
• Own revenue from electricity sales
7
THE GENERAL BOARD OF
DIRECTORS - COMPOSITION
• The composition of the General Board is set out
in section XIII of the EPM Act
• The Permanent secretary in the Ministries
responsible for environment
• Budget director or his/her representative
• Representative of the Ministry of finance
• Director of environment
• NGO representative
• All will serve voluntarily
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WHAT IS THE ROLE OF THE GENERAL
BOARD?
• Adopts and amends SIRRF`s internal regulations (incl. the
OM)
• Adopts the long term business strategy of the Fund
• Adopts assessment criteria for eligible projects
• Allocates funds among various thematic windows
• Approves Fund`s operational budget and annual report
• Procures independent external auditor
• Appoints the Executive Director
• Advises the Governor General on recruiting members on
the Board of Directors of thematic windows
• Approves financing of eligible investment projects
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THEMATIC WINDOW BOARD
• Separate and independent Board for each thematic window
• The members will be appointed by the Governor General
upon advice from the General Board
• The thematic window Board will:
• develop its own regulations and procedures
• develop and approve specific eligibility criteria for projects supported
under the respective thematic window
• establish and maintain an account for each thematic window
• keep proper records of accounts in compliance with SIRFF`s
financial management system and principles
• review, and approve or reject programs and project proposals
10
THE EXECUTIVE DIRECTOR
• To be appointed by the General Board through an open
and transparent selection process
• A person with experience and sufficient capacity in project
and financial management
• Strong interest in environmental management
• Responsible for entire day-to day operations of the Fund
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THE EXECUTIVE DIRECTOR – ROLE AND
RESPONSIBILITIES
• Legal representation of SIRFF and implementation of
General Board`s decisions
• Administration and management of Fund`s operations
• Presentation of internal reports, business plans, fund
raising strategies for approval by the General Board
• Review of project proposals before submission to the
General Board
• Signing of contracts for project financing and power
purchasing agreements
• Management of Fund`s property
• Preparation of annual budget and implementation reports
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THE FINANCIAL CONTROLLER
• Develops and maintains the proper organization of the
financial and accounting functions
• Oversees the implementation of the Financial management
system and respective accounting software
• Prepares financial statements, annual financial reports,
financial monitoring reports, etc.
• Maintains the accounting records of the Fund
• Approves and accounts for all disbursements for approved
projects and investments
• Communicates with internal and external auditors, tax
offices and any other financial authorities
13
PROJECT COORDINATION EXPERTS
• Supports applicants identify eligible projects and draft well
structured project proposals
• Helps project developers (applicants) on procurement
matters
• Conducts comprehensive project analysis
• Identifies and assesses project risks and potential
mitigation measures
• Takes ownership in a number of projects throughout their
whole project life cycle
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PROJECT COORDINATION TEAM -
EXPERTISE
Project finance expert(s) or Financial analyst
Renewable energy technical expert(s)
Environmentalist(s)
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SIRFF GENERAL BOARD SUPPORT STAFF
• Assist the ED in daily administrative and logistical activities
• Drafts the minutes at the General Boar meetings
• Back-up support to Project coordinators
• Handle Fund`s bookkeeping
• Assists the FC in preparation of financial statements and
other reports
• Assists the FC in fund disbursement and collection process
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TECHNICAL ADVISORY COMMITTEE
• An independent unit providing advise to the
General Board and the Thematic windows Boards
• Performs due diligence screening of submitted
project proposals
• Supports the decision making process
• Members – prominent technical and financial
experts
17
RISK POLICIES OF THE FUND
Market risk policy
Operational risk policy
Reputational risk policy
Investment risk policy
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MARKET RISK POLICY
• Refers to the risk of losing earnings or decline in the
economic value of SIRFF. May also include:
the risk of a decline in net asset value (NAV) or loss in investment
earnings (due to changes in equipment / electricity prices)
the risk of a decline in the value of the securities held by the Fund
interest rate risk for debt instruments
• Risk identification and assessment
as part of the transaction approval process
on an ongoing basis for all investments in the Fund’s portfolio
• Risk mitigation
Proper PPA/equipment delivery agreements to transfer the risk of
changing prices to the other party
Adjustments to the financial structure of investments – e.g. swaps
19
OPERATIONAL RISK POLICY
• Refers to potential losses caused by inadequate or failed
processes, people, systems. It may include:
IT risk, legal risk, risk of misconduct, etc.
• Risk identification and assessment
on an ongoing basis – each process owner will try to identify ways in
which the process could fail
assess the likelihood of a given risk to occur
assess the potential impact in case the risk materializes
• Operational risk reports – at least annually (more frequent
operational risk screening is however recommendable)
20
REPUTATIONAL RISK POLICY
• Refers to impairment of Funds reputation due to adverse
public opinion on Fund`s operations.
• Risk identification – by monitoring the perceptions of
various stakeholders:
Clients (existing and potential)
Money providers (donors and lenders)
Government and public agencies
NGOs, Media, Fund`s staff
• Mitigation measures
Better communication with all stakeholders
Continuous improvement of Fund`s operational processes
Transparent and open reporting of Fund`s performance to all
interested stakeholders
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INVESTMENT RISK POLICY
• Refers to a loss caused by clients failing meet their
obligations to pay the Fund
• Financial risk appetite – SIRFF will set limits for:
Maximum risk exposure by sector (tourism, healthcare, education)
Maximum exposure to given sub-contractor or off-taker
Maximum exposure to a given technology
• Financial risk mitigation:
Contractual guarantees from clients (electricity off-takers)
Performance guarantees or cash retainers from subcontractors
Adjustments to the financial structure of a project (e.g. equity
participation from a client in exchange of lower electricity price)
22
PROJECT ELIGIBILITY CRITERIA
• Relevance to EPMA implementation, thematic windows or
specific requests for proposals
• Sustainable project benefits
• Positive value for money
• Project can be linked with national and local strategies
related to climate change and environmental management
• Consultation with relevant stakeholders
• Project complies with existing legislation
• Environmental and Social safeguards
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THE PROJECT CYCLE - IDENTIFICATION
• Definition of thematic window eligibility criteria
• Proactive identification. The Fund Staff will:
Approach relevant stakeholders
Present SIRFF`s eligibility criteria
Perform sector analysis to identify potential beneficiaries
Prepare a list of potentially eligible stakeholders
• Launch a media/on-line awareness raising campaign to
promote the terms and conditions of an upcoming thematic
window
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INITIAL PROJECT SCREENING
• Project developers prepare IPPs, containing project
description, implementation timetable, goals and rationale.
• Fund`s staff may provide support to Project developers
upon request
• Initial appraisal – general eligibility check performed by the
Project Coordinator
• The Project Coordinator recommends to the ED an early
rejection or further evaluation of the IPP
• Project screening decision – the ED decides to reject the
IPP or proceed with it
• Project developers with rejected IPPs may appeal before
the Thematic window board
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COMPREHENSIVE PROJECT
APPRAISAL
• Technical feasibility assessment. Examination of:
Physical scale, design, engineering, location of the project
Technology to be used (incl. types of equipment or processes)
Major technical and organizational risks identification
Reliability of project costs estimates (incl. design, engineering,
installation and maintenance costs)
• Financial feasibility assessment. Checks:
The expected benefits exceed the project operational costs
(positive NAV)
Adequacy of the projected investment costs. Risk of cost overrun?
Project Developer`s level of expertise and track record
Financial soundness of the Project Developer (possibility to co-
finance if needed)
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COMPREHENSIVE PROJECT
APPRAISAL, CONTD.
• Environmental feasibility assessment – checks whether the
project complies with all regulations and permits
• The Project appraisal report – incorporates findings and
recommendations of all feasibility assessments. Covers:
Summary description of the project (incl. estimated “green” impact)
Project risk profile and possible mitigants
Project implementation timetable and financing structure
Recommendation for rejection or approval
• ”Non-objection” from the Technical advisory committee
• A refusal for “non-objection” may be appealed before the
General Board
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PROJECT APPROVAL AND
FINANCIAL CLOSURE
• Done by the Thematic window Board, based on ED`s
proposal and TAC “non-objection”
• The Board may approve / reject the project or
• Recommend changes to project design and scope
• All Project developers get notified of Boards decision (incl.
for declined project proposals)
• ED is authorized to sign approved projects
• Funds disbursement – according to the project
implementation timetable and in compliance with Fund`s
financial management rules
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PROJECT MONITORING
• The Project coordinator collects financial and project
progress and impact data
• Project monitoring plan – part of the project support
agreement. The purpose of the plan:
timely and adequate reporting
effective early warning system
tracks if the project contributes to SIRFF`s strategic objectives
• Project monitoring reports
• Reporting frequency – at least semi-annually
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INVESTMENT PROJECTS PROCESS
• Active market potential screening
• Continuous project identification and assessment (no calls
for proposals required)
• Financial structuring – Project Term sheet
• Power purchasing agreement – to reflect the Term sheet
• Rigorous analysis of the electricity off-taker`s financial
standing
• Final approval – to be done by the General Board
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PROCUREMENT AND COMMISSIONING
• Generally based on OECS procurement manual
• Conflict of interest / Fraud / Corruption precautions
• Automatic bid rejection in case of proven conflict of
interest or corruption
• Environmentally responsible procurement
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PROCUREMENT OF GOODS, WORKS
AND NON-CONSULTING SERVICES
• Invitation to bid procurement method - for
contracts exceeding USD 100,000
• Request for quotations (RFQ) with a minimum of
three quotations from different bidders - for
contracts between USD 10,001 and USD 100,000
• Shopping procurement method for contracts with
an estimated value below USD 10,000
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PROCUREMENT OF CONSULTING
SERVICES
• Restricted request for proposals with minimum
three bids/proposals for contracts of up to USD
75,000 (including taxes)
• Request for proposals open to all bidders for all
consulting services agreements with a total
contract value exceeding USD 75,000 (including
taxes).
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RESOLUTION OF DISPUTED CASES
• Complaints submission – via post service or
designated on-line form
• ED appoints complaint reporting officer within 2
days after submission
• The ED may involve external experts to support
the investigation
• The complaint officer issues a report with findings
and recommendations
• Overarching goal of the process – to find mutually
satisfying solution
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RESOLUTION OF DISPUTED CASES,
CONTD.
• In case an agreement cannot be reached, the
complainant may: • submit complaint to the office of the Permanent Secretary of the
Ministry of Health and the Environment
• contact the Office of the Minister of Environment
• proceed with legal action (if all previous steps proved unsatisfactory to
the claimant)
• Mediation or Arbitration is a recommendable
alternative to court procedures
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REPORTING REQUIREMENTS
Five-Year Business strategy
Annual operations and business plan
Annual report (incl. audited Financial statements)
Operational budget
Financial monitoring reports
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FIVE YEAR BUSINESS STRATEGY
• First draft due within 3 months after appointment of
ED
• Updated every 3 years
• Presents the strategic approach to running the
Fund
• Includes indicative long-term budget
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ANNUAL OPERATIONS AND BUSINESS PLAN
• Prepared annually by October 31st of the preceding year
• Describes the level of activity and financial result to which
the Fund management commits
• Lays out the thematic windows and RE investments the
Fund will focus on during the financial year
• Indicates the number of calls for proposals to be carried out
• Projects the volume of funds to be disbursed, broken down
by thematic window and type of investment
• Provides insight to Fund`s level of planned technical
assistance and marketing initiatives
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SIRFF ANNUAL REPORT
• To be prepared within 3 months after the end of the
financial year
• Presents the actual financial and operational results
achieved by the Fund
• Evaluates the actually achieved against the Fund`s
Business plan forecasts
• Includes SIRFF`s audited financial reports and the report of
the external auditor
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OPERATIONAL BUDGET
• Presents the budgeted level of revenues for the following
year, broken down by source (electricity sales, park entry
fees, water levies, grants, etc.)
• Provides estimate for expected operational costs (office
rental, communication, maintenance)
• Budgeted compensation of the ED and Fund staff
• Budgeted costs for technical assistance and marketing
activities
• Best case scenario – to be submitted together with the
annual business plan
40
FINANCIAL MONITORING REPORTS
• Due semiannually
• Presentation of Fund`s intermediate financial performance,
physical progress and procurement status
• Financial indicators to be reported:
Net asset value of Fund`s investments
Budget variances
Electricity sales collection rate and past-due recovery rate
• Includes report on aggregate Green impact indicators
Cumulative energy demand reduction (MWh)
Cumulative estimated GHG reduction
• Other performance indicators – number of marketing and awareness
raising campaigns; number of NGOs and local community groups
supported
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AUDIT OF SIRFF`S OPERATIONS
• Independent External Audit
Review and Verification of Fund`s Annual financial report
Auditor to be selected upon fair and transparent procurement
procedure
To operate in compliance to internationally accepted audit standards
Has unrestricted access to Fund`s records
Reports directly to the General Board
• Independent Internal Audit
To carry out regular inspections
Reviews Fund`s processes and operations at least semi-annually
Not necessarily part of Fund`s permanent staff
Has unrestricted access to Fund`s records
Reports directly to the General Board