Funding Opportunities

Request for Proposals – Fusion Experience Kenya Limited (REKL) – Havgas ProjectAl

Summary
The United Nations Foundation’s Clean Cooking Alliance (CCA) is accepting proposals for The Fusion Experience Kenya Limited (FEKL) – Havgas Project. FEKL is part of CCA’s Venture Catalyst Program launched in early 2020. The Venture Catalyst (VC) aims to provide a broad range of specialized support to selected companies, solidifying their commercial viability, enhancing their investment-readiness, and facilitating access to growth capital. The Venture Catalyst portfolio currently includes 33 companies operating in 14 countries. These include biofuel, LPG, and biogas fuel distributors; pellet, ethanol, and char-briquette producers; and ethanol, gas, electric, and biomass stove manufacturers.

According to the Kenya Forest Service, before the ban on charcoal production in Kenya in 2018, the charcoal sector supplied 3.1Mt of charcoal per year to millions of low-income urban homes in Kenya. Using inefficient production methods, the charcoal sector contributed to the destruction of millions of trees per year, decimating forests and causing significant damage. To solve this problem, in 2016, the Kenyan government initiated the Gas Yetu project with the stated intention of transitioning 5 million low- income households to LPG for cooking fuel. By 2018, after transitioning about 5 million households the project was put on hold due to several challenges and the government invited the private sector to participate.

During 2019/20, FEKL developed ‘Havgas’, a ‘tool and fuel’ business model that was designed as a charcoal-to-LPG transition channel for low-income urban households. The Havgas model utilizes a 0.5Kg LPG cylinder along with efficient stoves and aims to match charcoal users spending profile in terms of the cash outlay for cooking fuel. Havgas’ entry level cooking kit consists of a one-burner gas stove and 0.5Kg LPG cylinder costing KES 2,800 (~US$ 28), and the solution utilises the cylinder re-circulation model wherein customers swap empty 0.5Kg cylinders for full ones at a cost of KES 100 (~US$ 1). The intention is for the cylinders to be marketed through the existing charcoal sector distribution channels. FEKL has already invested in building an LPG refilling plant in Nairobi that is customised to service 0.5Kg cylinders and has the capacity to scale up significantly on the existing site.

Between December 2020 and February 2021, FEKL ran a 120-household pilot program in Githorai, Nairobi. The pilot and customer surveys conducted provided the following information to FEKL:

• The 0.5Kg LPG cylinder cooks for approximately 3 days, is cheaper than charcoal on a cost per meal basis at (at the KES 100 price point) and is well accepted by the target market.
• The KES 2,800 cooking kit (one-burner stove and cylinder deposit) is not affordable to the target low-income households and will be an impediment to switching these households from charcoal cooking fuel (pilot households were initially given the kit for free with the option to purchase or return the kit after a specific period).
• To transition the target 2 million households to LPG, FEKL has determined that a price of around KES 1,000 (~US$ 10) is the optimum affordable price point for the cooking kit.

To bridge the affordability gap for the initial adoption cost, FEKL is investigating the potential of tapping into climate mitigation funding like the carbon offset credit market. Initial investigations by a carbon consultant have indicated that:

• The carbon offset credit market is a viable option for climate mitigation activities like transitioning households from biomass to LPG; and
• The cost of the stove kit can be met by carbon credits earned over a 5-year period of the stoves use.

Background of Organization
CCA works with a global network of partners to build an inclusive industry to make clean cooking accessible to the three billion people who live each day without it. Established in 2010, CCA is driving consumer demand, mobilising investment to build a pipeline of scalable businesses, and fostering an enabling environment that allows the sector to thrive. Clean cooking transforms lives by improving health, protecting the climate and the environment, empowering women, and helping families save time and money.

Objective
CCA is seeking a suitably qualified and experienced firm, organization or company (hereafter “the respondent”) to provide business and financial advisory services to FEKL. The objective of the project is to evaluate the viability of FEKL’s Havgas business model and to identify strategic options available to FEKL to achieve its objectives. The respondent will be required to accomplish the following broad objectives:

• Independently assess FEKL’s market survey and pilot project results and ascertain the validity of the business proposition based on its LPG solution in the Kenyan market;
• Develop a holistic business plan (including a detailed financial model and analysis of unit economics) that will assist FEKL management in attracting partners and investors based on market, regulatory/policy, financial, logistical, and operational considerations and incorporating information provided to FEKL by the carbon finance consultant;
• Prepare FEKL management to position itself for discussions with financiers that fund climate mitigation projects and business models (e.g. The Kenya Commercial Bank (KCB) facility accredited to the UN Green Climate Fund for projects in Kenya); and
• Provide FEKL management with strategic options for how to take the project forward and a roadmap for the roll-out and scale up of the business model towards achieving its charcoal-to-LPG transition targets.
• CCA is specifically interested in understanding the viability of a small cylinder LPG business model as a clean cooking transition mechanism for low-income urban households and the potential replicability of such a model in other sub-Saharan African countries.

Scope of Work and Deliverables

The respondent will be required to complete the following work and deliverables:

1. Validation of Havgas product market fit:

• Verify FEKL household level economic cost benefit analysis for switching to a small LPG cylinder swap model at KES 100 vs charcoal usage. (FEKL has established that the Havgas LPG solution costs KES16.7 per meal, compared to KES40 for charcoal). Note: the respondent may need to supplement the data that FEKL has with additional market research. Proposals should include a methodology of how they would do this.
• Analyse and verify FEKL assumptions about the optimum selling price for the cooking kit (cylinder and stove) given the customer base and estimate demand for Havgas’ solution in Kenya (market sizing).

2. Business Plan
Develop a comprehensive business plan using inputs from FEKL and the respondents’ work on product market fit and including among other salient aspects identified by the respondent:

• Comprehensive financial model and analysis of the unit economics of the business model, with careful attention paid to:
  • Investment requirements for the optimum number of cylinders that will be required to effectively operate a re-circulation model with 0.5Kg cylinders reaching the required scale.
  • Distribution model economics accounting for the key factors of density, distance, throughput, and margin vis-à-vis Havgas’ target market.
• Sales and distribution strategy
• Assessment of the market and competitive environment
• Regulatory and policy considerations
• Human resource and operational considerations
• Integration of carbon finance to solve for kit affordability
• Strategy/roadmap for implementation of the business plan

3.   Pitch Deck
Produce a summarised version of the business plan in the form of a pitch deck that FEKL can use to approach financial institutions, investors, operational partners, and other stakeholders.

Project Period of Performance
It is envisaged the Respondent will have 12 weeks from contract execution to complete all the deliverables as defined in this scope of work. However, respondents are welcome to suggest alternative timelines as part of their proposals having given due consideration to balancing quality of the deliverables and the desire to have the work completed in an efficient and cost-effective manner.

Technical Requirements

• Excellent understanding of the Kenyan market with regards to clean cooking and/or energy access issues and business models.
• Experience working with early-stage enterprises/entrepreneurs and developing business models.
• Financial expertise, competence, and experience in developing business plans/business strategy with integrated financial models and the ability to analyse unit economics.
• Experience in conducting or co-ordinating fundraising for early-stage businesses and the ability to produce documentation relevant to investors and financial institutions.
• Demonstrable experience in, or knowledge of the downstream LPG supply chain or consumer focussed LPG business models would be an advantage.

Timeline

NB: The selected respondent(s) will be required to avail themselves for an initial kick-off meeting with FEKL and CCA after selection whilst contracting formalities are finalized.

Budget
A detailed budget in US Dollars must be submitted with the proposal. Budget should include both pre-tax and net of tax values. The budget should include direct costs (Personnel, Fringe Benefits, Travel, Sub-Agreements, etc.), as well as indirect costs (overhead). For indirect costs, please indicate a list of expenses covered by the indirect rate. For all direct cost, please include assumptions that were made to arrive at line-item costs (e.g. 2 trips @ $1,500/trip = $3,000 or 20 staff hours @ $40/hour = $800).

If a bid has a mathematical discrepancy, CCA may correct the discrepancy and notify the Respondent of the adjustment. In such circumstances, the Respondent may choose to withdraw their bid.

Evaluation process
CCA will review all written proposals and may request a phone or in-person interview and/or updated submission to address questions or provide clarification.  CCA will use the following criteria and weighting in our evaluation.

Intent and disclaimer
This RFP is made with the intent to identify a Respondent to deliver results as described in this RFP.  CCA will rely on the Respondent’s representations to be truthful and as described.  CCA assumes it can be confident in the Respondent’s ability to deliver the product(s) and/or service(s) proposed in response to this RFP.

If CCA amends the RFP, copies of any such amendments will be sent to all respondents to the proposal.

Proposal Guidelines and Requirements

• This RFP is open to multiple partners and is a competitive process.
• Proposals received after May 23, 2021 noon Eastern Standard Time will not be considered.
• The price provided should be in US dollars and should contain both pre-tax and net of tax values. If the process excludes certain fees or charges, the applicant must provide a detailed list of excluded fees with a complete explanation of the nature of those fees.
• CCA prefers a single point of contact who manages deliverables. If the execution of work to be performed by the Respondent requires the hiring of sub-contractors, the Respondent must clearly state this in the proposal. Sub-contractors must be identified and the work they will perform must be defined. Subcontractors are subject to vetting and approval of CCA.
• CCA will not refuse a proposal based upon the use of subcontractors; however, we retain the right to refuse the sub-contractors you have selected.
• Provisions of this RFP and the contents of the successful responses are considered available for inclusion in final contractual obligations.

Format for Proposals
The proposal should be no longer than 10 pages in length including appendices (PDF document) and include the following sections:

• Section A: Background and Objectives – highlighting the respondents’ understanding of the scope of work.
• Section B: Credentials – description of respondents’ skills and experience and as relevant to the scope of work and deliverables.
• Section C: Examples of related previous work – specifically relevant to this RFP
• Section D: Work Plan and Methods – including an estimate of the total time required for the engagement.
• Section E: Detailed Budget.
• Section F (or included in appendices): Profiles/abridged CV’s of the individual respondent(s) and any subject matter experts who would be assigned to the work.

Proposals must include applicant signature as well as a signed declaration form. Proposals must include the full legal name of applicant, as well as legal formation and ownership structure (e.g. incorporation certification, tax status and ID, etc.).

Contracting and Compliance
CCA will negotiate contract terms upon selection. A copy of the contract terms and conditions will be provided upon selection. All contracts are subject to review by the UN Foundation’s Business Services and Budget Reporting team. The project will start upon the complete execution of the contract. The contract will outline terms and conditions, scope, budget, and applicable flow down terms. Selected recipient(s) must comply with Alliance, United Nations Foundation, and funder compliance requirements. The selected recipient(s) must also undergo detailed legal, financial, and commercial due diligence.

Release
The Respondent understands that CCA has chosen to solicit an RFP for consulting services, and that the Respondent’s response does not guarantee that CCA will enter into a new contract with the Respondent or continue any current contract(s) with the Respondent.

The Respondent agrees that CCA may, at its sole discretion:

• Amend or cancel the RFP, in whole or in part, at any time
• Extend the deadline for submitting responses
• Determine whether a response does or does not substantially comply with the requirements of the RFP
• Waive any minor irregularity, informality or nonconformance with the provisions or procedures of the RFP
• Negotiate with all Respondents UNF deems acceptable
• Issue multiple awards
• Photocopy the responses for evaluation/review

This RFP is not an offer to contract. CCA assumes no responsibility for Respondent’s cost to respond to this RFP. All responses become the property of CCA.

The Respondent, by submitting a response to this RFP, waives all right to protest or seek any legal remedies whatsoever regarding any aspect of this RFP.

The Respondent represents that it has responded to the RFP with complete honesty and accuracy. If facts provided in the Respondent’s response change, the Respondent agrees to supplement its response in writing with any deletions, additions, or changes within ten (10) days of the changes. The Respondent will do this, as necessary, throughout the selection process.

The Respondent understands it may receive proprietary and confidential information from CCA during the RFP process (“Confidential Information”).  The Respondent and CCA agree to not use Confidential Information for any purpose other than the Respondent’s participation in the RFP process, and to not reveal Confidential Information directly or indirectly to any other person, entity, or organization without the prior written consent of the other party. The Respondent and CCA further agree to exercise all reasonable precautions to maintain the proprietary and confidential nature of Confidential Information where it can best demonstrate its value and capacity to delivery ecosystem-wide, meaningful value.

Grounds for Exclusion
Material misrepresentations, including omissions, may disqualify the Respondent from a contract award.

Submissions will be rejected in CCA’s sole discretion if it finds that the Respondent has engaged in any illegal or corrupt practices in connection with the award.

The Respondent will be excluded from participation for the reasons below. By submitting a proposal in response to the RFP, the Respondent confirms that none of the below circumstances apply:

• The Respondent is bankrupt or being wound up, is having their affairs administered by the courts, has entered into an arrangement with creditors, has suspended business activities, is subject of proceedings concerning those matters, or is in any analogous situation arising from a similar procedure provided for in national legislation or regulations.
• The Respondent or persons having powers of representation, decision-making or control over them have been convicted of an offence concerning their professional conduct by a final judgment.
• The Respondent has been found guilty of grave professional misconduct; proven by any means which CCA can justify.
• The Respondent has not fulfilled obligations relating to the payment of social security contributions or taxes in accordance with the legal provisions of the country in which they are established, or within the United States of America, or those of the country where the contract is to be performed.
• The Respondent or persons having powers of representation, decision-making or control over them have been convicted for fraud, corruption, involvement in a criminal organization or money laundering by a final judgment.
• The Respondent makes use of child labor or forced labor and/or practice discrimination, and/or do not respect the right to freedom of association and the right to organize and engage in collective bargaining pursuant to the core conventions of the International Labour Organization (ILO).

Principal Points of Contact

Geofrey Lusaggi, Fusion Experience Kenya Limited
Geofrey_Lusaggi@triconti.com

Simba Mudimbu, CCA
smudimbu@cleancookingalliance.org

Submission details
Please address your submission to:

Geofrey Lusaggi (Geofrey_Lusaggi@triconti.com)
cc: smudimbu@cleancookingalliance.org
Subject Line: RFP Submission_FEKL Havgas

Proposals are to be submitted in PDF form, with adjoining workplan and budget in Excel.

Deadline: May 24, 2021