Development of Vendor Manual for Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL) Partnership to Advance Clean Energy-Deployment (PACE-D) Technical Assistance Program December 1, 2015

Background MPUVNL is the State Nodal Agency which manages the off-grid and grid connected renewable energy projects that are part of MNRE Schemes After sales support and operation & maintenance during operation phase of Solar Photovoltaic (SPV) is a major challenge & limitation. This limitation has resulted in loss of consumer faith in Solar PV programs across the state. It is envisioned that introducing a robust and comprehensive vendor policy/guidebook will help limit above mentioned barriers.

Vendor Manual for MPUVNL: Objective Objective of vendor manual To increase participation from Vendors To reduce Processing and short listing of vendor application To involve credible vendors To incentivize efficient performance To penalize inefficient work To ensure optimum and effective use of the subsidies To prepare an effective vendor manual, an efficient approach needed to be developed covering best practices involved across the selected States

Comparative analysis of best practices in selected states: (Andhra Pradesh, Chhattisgarh, Maharashtra, Rajasthan and TamilNadu. To understand and streamline administrative procedures, To reduce the response time. The study has been carried out focusing on development of vendor manual for MPUVNL Mapping of key learning's from the empanelment processes: The Program assessed the key learnings from the empanelment process, tendering, and after-sales and support covering broad and standard parameters to fit for MPUVNL Vendor consultation: Consulted with select vendors and key personnel who develop the framework for grading and empanelment of channel partners/system integrators Preparation of standard vendor manual: The manual focuses on three different aspects of vendor processes: Empanelment management process. Tender management process. After-sales service and support management process. Vendor Manual for MPUVNL: Approach

Comparative Analysis: Best Practice from selected states and agencies Empanelment process Chhattisgarh, Tamil Nadu, Andhra Pradesh MNRE Channel Partners Rating agencies Tendering process Chhattisgarh, Maharashtra, Rajasthan, Madhya Pradesh Madhya Pradesh New and Renewable Energy Department After sales service Chhattisgarh, Maharashtra, Rajasthan, Madhya Pradesh Madhya Pradesh New and Renewable Energy Department

Broad parameters used for evaluation Empanelment process Eligible entityEligibility criteria Registration fees and validity Renewal feesSecurity deposit/EMD Cancellation of empanelment Application invitationLocal office requirementVerification Tendering process Eligible entity Eligibility criteriaEarnest money depositSecurity depositGuarantee generation Penalty for default in guarantee generation Terms of payment After sales service Project completion timeTenure for O&M support Scope of Operation and maintenance Establishment for after sales service centre Penal Measures for not attending complaints

Outcome of Comparative Study for Empanelment Process Every state has a different process and terms/conditions to select a vendor. Empanelment of the vendors is a onetime selection process of an eligible vendor. Not every state follows a separate empanelment process. The Program recommends MPUVNL to introduce a separate empanelment process. Empanelment Model The Program recommends MPUVNL to keep high registration fees for empanelment in order to evaluate the financial capability and payment capability of the vendor which acts as a filter allowing only serious players. Registration fees The Program recommends MPUVNL to encourage participation of new vendors. New vendors can become empanelled vendors after availing training from MNRE or other recognised institute for installation supply, commissioning. Entry of new vendor The Program recommends MPUVNL to introduce target based renewal of empanelment under which renewal of empanelment is done only after vendor has achieved specified targets for that FY. Renewal of empanelment Chhattisgarh is a successful model for the process of empanelment. States may adopt the empanelment model of Chhattisgarh for their state level empanelment process

Outcome of Comparative Study for Tendering Process MPUVNL has a streamlined tendering process Tendering Process It is crucial to have necessary parameters for the tendering process. The Program recommends MPUVNL to regularly update and improve the tendering process as per the evolving needs of the agency, and cover all key parameters in its process. Inclusion of important parameters for tendering process MPUVNL has a streamlined tendering process, and must continuously update and improve the process

Outcome of Comparative Study for After-sales Service Process An online portal is necessary to fix a schedule for inspection, uploading of necessary document and online verification. The Program recommends MPUVNL to introduce online verification portal for quarterly reporting; where the vendor can upload necessary documents and book a slot for inspection during after-sales service. Online verification portal The Program recommends MPUVNL to specify the time frame for project completion and other specifications regarding the same. Project Completion time It was observed that the responsibility for maintenance after completion of five years of CMC is not defined. The Program recommends MPUVNL to define the detailed roles and responsibilities for hand over/take over of maintenance of the system after five years of after-sales service especially cost bearing responsibility, and maintenance responsibility. After completion of 5 Years MPUVNL should improve/update its after sales service to be more efficient and to provide long term service

Keycomponents for development of internal process under vendor manual Empanelment Process Tendering ProcessAfter-sales Service

Empanelment Management Process Need, applicability and scope of empanelment process Constitution of internal committee for initiation of empanelment process Setting timelines, roles and responsibilities of committee Setting norms, fees and charges for empanelment Empanelment Initiation Preparation of empanelment application form Setting responsibilities and timelines for application issuance process Uploading and Media reach of application Defining application fees Terms and conditions for acceptance and rejection of application Empanelment Application Management Process Constitution of internal committee for evaluation of application Setting roles and responsibilities of committee Responsibility for checking parameters for evaluation (General, Technical and Financial eligibility condition, Prior experience etc.) Defining responsibility and timelines for prequalification check Evaluation of Application for Empanelment Constitution of internal committee for approval of empanelment Roles and responsibilities of committee Contents and format of certificates for approval/registration Responsibility and timelines for preparation and Issuance certificate for approval/registration Validity of certificate Approval and Sanction of Empanelment Preparation of vendor master Right to reject from empanelment Right to extend timelines Other conditions Empanelled Vendor Management

Tender Management Process Setting of Eligibility Conditions Constitution of internal tendering committee Setting Roles and responsibilities of committee Timelines for identifying project and issuance and opening of tender Tender Initiation Preparation of tender document Responsibility, timelines for issuance of tender document constituting duration and validity of tender Uploading of tender document Defining applicable fees and charges Responsibility and timelines for management of Pre-bid meeting Tender Management Process Acceptation and rejection of tender Right to extend timelines Contract conditions Opening of Tender Constitution of internal committee for evaluation of tendering process Parameters and responsibilities for evaluation of tender Earnest Money Deposit, Security deposit, Penalty provisions Setting responsibilities to keep a check on Terms of payment and make payment accordingly Setting Enforcement condition Evaluation of Tender Constitution of committee for approval and sanction of project Setting project timelines Contract award and negotiation process Tender Award and Award Management

After-sales and Service Support Management Constitution of internal committee for after sales service Setting roles and responsibilities of committee Setting responsibilities of District Renewable Energy Officer After-sales Service Setting responsibilities and timelines for monitoring of the project Setting parameters for monitoring and verification Setting responsibility and timelines for checking facilities at local service centers of vendors Setting responsibility and timelines for checking preventive/routine maintenance Conditions for breakdown/corrective maintenance of installation/project Setting penalty provisions Force measure conditions Monitoring and Verification Setting roles and responsibilities after finishing of 5 years Comprehensive Maintenance Contract (CMC) Right to extend timelines Other conditions Responsibility After 5 Years CMC

Conclusion The vendor manual, developed by the PACE-D TA Program, will help MPUVNL to: –Streamline the vendor management process. –Establish the required empanelment framework including guidelines to carry out the process empanelment, and vendor management. –Develop effective tendering process and after-sales service process. –Develop a stringent compliance and monitoring framework which will evaluate the service provided by the vendors from time to time and penalties provisions for the defaulter. –Develop a strong supply chain. The Model Vendor Manual, with standardised process for empanelment, selection, tender and after-sales support, will benefit MPUNVL and other SNAs as they too can refer to the manual for streamlining their process of vendor selection and management.

Thank You Anurag Mishra Senior Clean Energy Specialist USAID/India Nithyanandam Yuvaraj Dinesh Babu Chief of Party PACE-D TA Program