Feasibility  Study  On Productive Use Of  Electricity  –  Mwenga  Hydro  Power  Project

Please submit the proposal by 25th April 2016 to Mr. Abishek Bharadwaj at the
following email: abishek.bharadwaj@gvepinternational.org
1.1.Rift Valley Energy Ltd. (RVE) is a privately owned renewable-energy project
development company, dedicated to own and operate renewable energy
infrastructure projects in Eastern and Southern Africa (with current focus on
Tanzania). In Tanzania RVE has already established a solid presence, with
one combined generation and distribution business implemented (“Mwenga
Hydro Project”) and an adjacent rural distribution project currently under
development (“Mwenga’s Rural Network Expansion into the Kihansi basin”).
The Mwenga Hydro Project (developed in cooperation with the EU/ACP
Energy Facility and the Rural Energy Agency of Tanzania) is a
comprehensive, state of the art renewable energy generation and distribution
project, located in the Mufindi district, Southern-Tanzania. It currently
operates a 4MW hydro-power-station and 145 km of rural distribution network,
supplying (as back-up facility) the local tea industry, 17 villages and the
national utility (TANESCO), with an annual generation out-put of 21,5 GW/h of
grid-quality, renewable electricity (approx. 0.5% of the national usage). The
project has developed and deployed an innovative state of the art cell-phone
based, pre-paid-electricity-vending-system, supplying to date more than 1,600
rural households with cheap, green, on-demand electricity (it is anticipated
that another 1000 households will be connected in this area).
Mwenga Hydro's Rural Network Expansion into the Kihansi basin (in
cooperation with the EU/ACP Energy Facility): This project is currently
expanding Mwenga Hydro’s rural network through the construction of an
additional 180 km of distribution network, with the aim to supply further 15
villages (3.000 households) located in the neighbouring Kihansi Basin
(currently with no access to permanent/grid electricity).

1.2.GVEP International is a non-profit organization working to increase access to
affordable and sustainable energy services and reduce poverty in developing
countries. GVEP is involved in assisting RVE in enhancing the productive use
of electricity by businesses connected or being connected in these 32 villages
and promotion of electricity usage amongst the domestic consumers.

1.3.The Forestry Development Trust (FDT) is an independent institution set-up to
work with the public and private sectors to drive a long-term programme
ultimately aimed at transforming the sector. It plans to: a) Increase the supply
of higher-value wood products and energy from sustainable sources; b)
Increase smallholder planting and employment in sustainable private forestry;
c) Raise net incomes for the sector’s smallholders; and d) Ensure quality
services and industry functions are provided sustainably. FDT is working to
promote the sustainable growth of Tanzania’s forestry sector and ensure large
and small-scale growers can exploit compelling opportunities in commercial
timber and energy markets,
The main project objective is to support 160 micro-businesses, some to be clustered
together in productive use centers, using electricity from the Mwenga grid. The
targeted businesses would likely be in the areas of wood manufacturing (i.e.
carpentry workshops), metal and welding workshops, eggs incubations, chicken
rearing, grains mills, mechanical and repair garages, timber dealers, tailoring marts,
LUKU and MPESA agents. These are our initial ideas but the consultant should use
their independent judgement in recommending appropriate business activities to
focus on. The project will also aim at attracting around 20 SMEs into the area
covered by the Mwenga grid. These will be larger businesses, employing at least 10
people and operating at some scale. Forestry related activity is likely to be an area of
focus for many of these SMEs.
A second objective of the project is increasing domestic connections, through more
effective promotional activity and customer engagement. Currently around 1,600
households in the area covered by the Mwenga grid are connected to a power
supply. The project aims to increase that to 2500 households, and to connect a
further 3000 households in the Kihansi basin villages.
In order to plan and execute the project successfully, it will be important to undertake
a feasibility study of the local business opportunities as well as investigate innovative
ways to stimulate the uptake of household connections. This will assist us to achieve
the project objectives and targets. Therefore, the consultant along with GVEP will
undertake a study for 4-5 weeks in April/May 2016.
The Consultant will undertake the tasks listed below for the feasibility study:
i. Technical analysis of the current infrastructure
An analysis will be carried out on the social/load profiling of the current
customers catered to by the plant.
• Review existing infrastructure and conditions, including operational

• Technical characteristics like generation data, auxiliary consumption,
seasonality, etc.
• Existing load profile/consumption pattern through the day by customer
segment – there are two tariff levels
• Mapping of the customers by consumer segment along the project area –
both domestic and business customers
• Evaluate the payment/recharge history of the current consumers by
segment and area on the prepaid metering system
ii. Evaluation of the project area
Detailed understanding of the project area covering the 32 villages across
Mufindi and Kihansi basin.
• To study the geography, locations and characteristics of the project area
covering the 32 villages, including proximity to main roads and local market
• Mapping of the villages and focus on the occupation and livelihood
• Identify the location for potential productive use centers within the project
• Mapping the market opportunities in each of these target villages
iii. Domestic connections
To assess the consumption patterns of the domestic users as they use
modest amounts of electricity and investigating the scope to increase the
consumption, perhaps through encouraging the purchase of modern
• To survey a sample of 50 households connected to the Mwenga project
and 50 households not connected to the project within the existing
distribution network
• The output of the survey should be analysed to provide an informed view of
the following key indicators:
Ø Motivation for connecting
Ø Current patterns of energy use/appliances
Ø Barriers to connecting
Ø Scope of innovative packaging of costs and electricity use
Ø Safety concerns
• Defining the promotional strategy in the existing network and the planned
network based on the aforementioned analysis
iv. Micro-business opportunities
To assess the potential of business expansion amongst the already
connected businesses and the potential of new businesses within the project
area, especially as a part of the productive use centers through surveys

• To interview 60 micro-businesses which use Mwenga electricity to operate
their business. Key parameters to assess:
Ø Business case including cost, revenues and expenditure on electricity
Ø Challenges with the supply, if any. Includes dependence on other
Ø Potential and willingness to use other power consuming equipment to
enhance their business.
Ø Capacity/willingness to use 3rd party financing to invest in this kind of
• To interview 40 households not in business about:
Ø Occupation and skills
Ø Awareness of using electricity beyond lighting, phone charging and
Ø Assess the awareness of the socio-economic benefits of setting-up
Ø Willingness to start a business with adequate training support
Ø Capacity/willingness of investing in start-up capital, using 3rd party
financing and/or potential savings.
Note: These 40 household survey would be in addition to the 100 households
surveyed in the domestic connections section. Ideally, these households
should be connected households.
v. SME opportunities
• To assess the potential of business expansion amongst the already
existing SMEs and the potential of new SMEs within the project area
through surveys.
• To interview 20 SMEs in Mafinga Town covering a wide range of areas like
wood/carpentry workshops, metal and welding workshops, eggs
incubations, chicken rearing, grains mills, mechanical and repair garages,
timber dealers, tailoring marts, LUKU and MPESA agents. Areas of
Ø Business cases, including cost, revenues and expenditure on electricity
Ø Challenges with power supply and their dependence on alternate
Ø Potential or willingness to be a part of the project within the existing
Ø Potential and willingness to use other power consuming equipment to
enhance their business for the ones already connected
vi. Other key stakeholder consultation
Consultation with other key stakeholders having a direct or indirect influence
over the business ecosystem within the project area. This is critical to
understand the business challenges and the market opportunities. A few of
them are:

• The major industry in the area is timber and the project will draw on
economic analyses and other work undertaken by the Forest Development
Trust based in Iringa. The consultant should review FDT’s analysis of the
economic potential of the timber sector and how this might be developed,
with particular reference to possible location of sawmills close to the
Mwenga grid
• In coordination with FDT to conduct interviews with 10 timber dealers and
2 timber associations of Mafinga and Mufindi.
• To visit other project stakeholders including government agencies and
local offices (i.e tea board, irrigation board, etc.)
• To visit and conduct interviews with 4 micro-finance institutions based in
Mafinga town
• To visit and conduct interviews with 8 equipment and machinery suppliers
in Mafinga, Iringa and Dar es Salaam
The primary outcome sought from this work is a full feasibility study. Opportunities to
enhance to utilization of the existing plant through increased business activity may
arise, subject to the delivery of the feasibility studies.
Detailed study guidelines are attached as Annex A; a summary of the structure of the
study is provided as below:
• Introduction – Purpose, project history
• Methodology – Approach, Primary & secondary data collection activities and
• Project details – Technical details, Load profiling, Customers by segment
including domestic and enterprises
• Enhancing domestic connections – Consumption patterns, barriers, innovative
• Micro-business potential (Existing customers) - Business model, challenges,
• Micro-business potential (New customers) – Market, willingness, challenges
and potential
• SME potential - Classification of existing industries, power source,
expenditure patterns, willingness to connect
• Potential areas of cooperation with Forest Development Trust
• Stakeholder opinions – Business trends, challenges, mapping the ecosystem,
favourable conditions, value chains
• Total Potential – Micro-businesses and SMEs
• Implementation plan
• Conclusions

The timeframe for the feasibility study is estimated at 5 weeks, with the duration of
specific activities as follows:
• Surveys, data collection and meetings – 3 weeks
• Mapping & Analysis – 1 week
• Report writing and finalization – 1 week
The project is seeking a reputable firm to undertake feasibility studies for one or
more of the project sites. Collectively, the study team will have a strong background
in rural electrification and in the following areas:
• Research and sales expertise
• Experience in the rural electricity sector and understanding of technology is
• Strong skills in surveys and consultation
• Strong analytical and drafting skills
• Fluency in English and Swahili
• Knowledge of the Mufundi area is ideal
i. Consultant
The Consultant will be responsible for organizing the work and delivering the
outputs of the assignment. They will work closely with the GVEP to collect and
analyse data and undertake all necessary measurements, and report on the
progress of key activities. The milestones and reporting mechanisms will be
determined upon the start of the assignment in coordination with RVE and
GVEP. Prior to the completion of the assignment, the Consultant will hand
over the feasibility study and data behind it to RVE and GVEP.
ii. Rift Valley Energy
RVE will assist the Consultant with data collection related to the plant and can
provide selected data regarding their current rural / commercial customers.
iii. GVEP International
GVEP International will oversee and monitor overall progress, ensure that
deliverables are completed to a high standard, and provide input and
guidance on the final report. GVEP may also accompany the consultant in a
few stakeholder meetings.
iv. Forest Development Trust
FDT will provide information on the economic potential of the timber sector
and advice on how the industry might best be developed.

The project is expected to contribute significantly to social and economic
development of the communities around the project site. Expansion and
diversification of income generating activities, jobs creation, and migration of SMEs
and investors to the area will increase due to the accessibility and stability of
electricity in the area. The exact number of businesses we aim to attract into the
project will be determined after the feasibility phase. Through the feasibility study,
sufficient details and working mechanisms for the project area could be established.
The survey will identify realisable benefits and opportunities for businesses and for
RVE. RVE will be able to sell a greater percentage of their generated power to these
The proposed structure for the feasibility study is outlined as below:
i. Introduction
- Purpose of the study
- Scope of work
- Project history
ii. Methodology
- Approach
- Primary data collection activities and techniques
- Secondary data collection activities and techniques
iii. Project details
- Generation
- Distribution layout
- Capacity utilization & load profiling
- List of customers by segments
iv. Domestic connections
- Consumption patterns
- Barriers
- Innovative packages
- Promotional strategy
v. Micro-business potential (Existing customers)
- Business model
- Expenditure on electricity
- Feedback on power supply
- Design and implementation plan for an on bill financing tool (if
- Challenges
vi. Micro-business potential (New customers)
- Market opportunities
- Use and expenditure on alternatives
- Willingness of businesses to pay for power
- Potential of productive use centers
- Design and implementation plan for an on bill financing tool (if

vii. SME potential
- Classification of existing industries
- Current sources of power
- Incomes and expenditure patterns
- Ability and willingness to connect to the power line
- List of potential connections through SMEs
viii. Rural households – connection uptake
- Classification of target clusters
- Design and implementation plan for an on bill financing tool
(connection costs/ready-boards)
ix. Stakeholder opinions
- Delivery & performance of the business ecosystem
- Trends in occupation
- Challenges with power supply and alternatives
- Conditions favourable to businesses (Policy, demand, etc.)
- Sustainable value chains
- Challenges/constraints in the area for businesses
x. Total potential
- Potential for expansion of micro-business already connected
- Project demand growth of new micro-businesses
- Potential demand growth of SMEs
- Potential of more rural households connected
xi. Implementation plan
xii. Conclusions



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