Alternative Fuel Challenge Fund (AFCF)

Call for proposals for a competitive challenge fund to support fuel producers’ upscale production and sale capabilities.

Reference Number : 83471355

Publication date : 25.09.2024

1. Context

According to the Fifth Rwanda Population and Housing Census, 2022 Main Indicators published in February 2023, one third of the Rwandan households (32%) have and use energy-saving stoves. This means that the remaining 68% of the households still rely on traditional cookstoves and use firewood or agricultural residues for cooking. The inefficient traditional biomass use has a high impact on climate, the environment as well as user’s health.

In its Nationally Determined Contributions (NDCs), the Government of Rwanda committed themselves to the following:

• At least 80% of the rural population phase out open fires by accessing modern efficient or alternative cleaner fuels and cooking stoves technologies.
• At least 50% of the urban population use modern efficient cookstoves or cleaner cooking fuels, such as pellets, briquettes, electricity, or green charcoal.
• Reduce institutions’ demand of wood biomass for cooking and heating through supporting and encouraging institutions to use alternative improved cooking technologies with emphasis on Electricity, LPG and Green Charcoal
• Reduce the consumption of wood for charcoal by improving the efficiency of charcoal production and its value chain.
• Increase supply of woody biomass through improved sustainable management of woody biomass resources and agroforestry promotion background

The Reducing the Climate Impact of Cooking in Rwanda (ReCIC) project, implemented by EnDev, is co-funded by the European Union under the Global Climate Change Alliance Plus (GCCA+) initiative and aims to address the above mentioned challenges through a threefold approach: increasing and improving the production capacities of ICS and fuel producers, raising consumer awareness, and supporting dissemination density.

By designing an Alternative Fuel Challenge Fund (AFCF), ReCIC seeks to empower private sector companies in the Rwandan cooking energy sector to increase the production and enhance the distribution of alternative fuels such as briquettes and pellets. In particular, the project pursues the following objectives

• Provision of technical training for alternative fuel producers
• Establishment of operational and functional production sites
• Testing of fuels
• Establishment of retail points in Kigali and outside the capital

Through the Fund, ReCIC will support selected companies with business development services such as trainings and targeted financial contributions (installment)s against evidence support to enable companies to develop, test and scale up biomass-based alternative fuels, and business models that have not been fully disseminated in Rwanda.

2. Technology Focus and Support Pillars

The application and support will focus on market and business model development for alternative fuels (i.e. briquettes, green charcoal and pellets)

The Alternative Fuel Challenge Fund (AFCF) aims to:

• Enhance the production of alternative fuels such as briquettes and pellets
• Establish and improve production sites of alternative fuel companies
• Extend the supply chain of alternative fuels
• Enhance the business capacities of private sector companies

The Alternative Fuel Challenge Fund has two pillars

1. Financial support: applicants will be requested to outline a comprehensive business plan incl. equipment and materials needed to either enhance the production of alternative fuels or to establish and improve the production side
2. Capacity development: targeted training such as technical training as well as business development services will be provided to all selected companies to provide new skills to improve the alternative fuel production and to further develop existing business models.

3. Who can apply

Applications are open to all Small and Medium-sized Enterprises (SMEs), cooperatives or companies operating in the clean cooking sector in Rwanda and producing alternative fuels such as briquettes, pellets and green charcoal.

Eligibility criteria

A company / cooperative will be expected to meet the following conditions to qualify for the AFCF:

Technology Focus

• Applicants are encouraged to produce / promote efficient and affordable alternative fuel sources (pellets, briquettes, and green charcoal) to firewood and/or traditional charcoal that minimize fuel consumption
• Having tested the calorific value, moisture content, hardness, ash content, chemical composition, particle size of the promoted alternative fuel tested by a recognized and independent institution is an advantage.

Lega Status

• The company must be registered with Rwanda Development Board (RDB) or Rwanda Cooperative Agency (RCA) (attach certificate)

Financial Status

• The company must be able to make its own contribution of at least 20%. The remaining 80% of the total cost of the implemented business solution will be covered by the AFCF.
• The company should be able to submit a detailed budget for the business model and should be able to provide a clear understanding and explanation of the required funds to improve and scale up the alternative fuel production

Capacity Status

• The company has been operational for at least 36 months and has been selling alternative fuels for at least 24 months
• The company can prove that at least 10% of the technical staff has at least 4 years of working experience in the alternative fuel (briquettes and pellets or green charcoal) production sector with relevant marketing and management skills as an obligation
• A proven collaboration with local government officials/ district is an added value.
• The company/ cooperative should have a clear organizational structure.

4. Evaluation Criteria

Given the fulfillment of the eligibility criteria, the applicants will be assessed based on their motivation, business plan as well as against the following evaluation scorecard (hereafter referred to as technical assessment).

Other considerations for the evaluation

• Scoring and Ranking: Based on the scoring, a ranking will be compiled, while the first five will be shortlisted.
• Due Diligence Checks: a detailed due diligence will be conducted by the project technical team as part of the evaluation process during which legal, financial, and commercial compliance aspects of the applicant will be assessed. This may involve site visits, interviews with management and staff and reviewing of a company’s financial and legal documentation where necessary. Shortlisted applicants will be required to participate in this process and provide relevant information/ documentation to the project technical team and facilitate the due diligence process.
• Overall, the technical and financial assessment will contribute 70% to the total project score, while due diligence will make 30% of the total result.

5. Concept of the Bid

Technical offer

Bidders must submit their proposal using the provided technical offer submission form, which is provided in an editable PDF format. The following points should be addressed by applicants:

• Expected benefits of the proposed idea
• Technical sustainability of the proposed idea;
• Viability, robustness and institutional strengths of the business (e.g., team composition, assets, own financial contribution, risk management, prior recognition);
• Realistic targets, i.e. description of the products and the targeted quantity of products produced and sold monthly.
• Ensure that the proposed solution meets the required standard and specifications. 

The proposal should aim to accelerate sustainable market development for alternative fuels in Rwanda, avoiding market distortion or unfair competition (e.g., third-party funded free distribution)

In the technical offer submission form, each category contains guiding questions that must be answered. For each guidance question, the evaluation grid used by the evaluation committee is posted so that bidders have a clear idea of the criteria on which their bids will be evaluated. The proposal must be submitted in English. The total length of the offer must not exceed 12 pages with font Arial, point size 11.

Submission of other templates or forms or offers in a language other than English will result in the rejection of the offer. If the tender form is not provided in the PDF form provided or exceeds 7 pages, the excess portion will not be evaluated. No other document beyond the submission form will be considered for evaluation.

Financial Offer

Bidders are also required to fill out the financial offer submission form for the financial offer. Bidders may propose total budgets of up to RwF 35.0 million as a project contribution.

• The company must be able to pay an own contribution of at least 20%. The remaining 80% of the total cost of the implemented business solution will be covered by the AFCF.
• The proposal should demonstrate the expected source of revenue or income for the own contribution, this may include sales revenue, grants, donations. The company must assure that the prevented revenue projections are realistic.

6. Selection Process Description

The selection process will include.

• Screening candidates based on the described eligibility criteria
• Screening candidates based on their technical as well as financial proposals
• Assessing, ranking and shortlisting of the eligible candidates based on the described criteria,
• Due diligence checks (in the field)
• Final listing of winners with a clear identification for AFCF support based on their business plans.

Selected or winning companies and cooperatives will receive a service contract for their business idea presented in their proposal. While applicants must be able to provide an own contribution of a minimum of 20% the AFCF shall support with a maximum of 80%.

As this is a competitive process, the size of the grant support will differ amongst the four winners and according to their ranking.

Tender Plan

7. Funding and Milestones

Funding and support

The first five with the highest score will receive funding in the range from Rwf 20 million to Rwf 35 million to be invested in equipment and machines or fuel business. The funding request should be realistic and reasonable and GIZ reserves the right to allocate less funds than requested.

During the duration of the service contract up to three installments will be made. Once service contract are signed, the payment of the first instalment will be released. The following two installments will depend upon the successful completion of the deliverables per milestone. Selected bidders are expected to be ready for due diligence evaluation.

The duration of the AFCF is 1 year of implementation from the start of the service contract. The successful bidder is expected to ensure and sustain the accessibility of alternative fuels to the target groups/ end users (i.e.: households, schools, refugees etc.). During this period, GIZ and its partners may reserve the right to negotiate other forms of cooperation agreements or tender solutions for the grant fund.

Milestones

Please submit electronically your EoI (technical & Financial offer) in 2 separated emails and should be in PDF files to this email ONLY: RW_Quotation@giz.de until latest 11^th October 2024. Please you must write on each email subject this sentence: 83471355-Technical/financial offer, without this sentence, your offer may not be considered.

Hard copies are not allowed this time

GIZ reserves all rights

Annexes

• Annex 1 - Expression of Interest Application form
• Annex 2 - Technical assessment grid