The Power Sector Governance and Management Assessment will identify, analyze, and provide actionable and prioritized recommendations for future USAID programming along two work streams to improve (1) DABS corporate governance oversight and senior management performance, and (2) electricity sector governance and regulatory framework of the sector.
In this RFP, “governance” refers both to DABS corporate governance (as defined below) and to broader electricity sector governance. These recommendations should address governance (1) and senior management (2) actions that will lead to improvements to utility operations, management, and business processes resulting in increased electric reliability, reduced losses, improved capital planning and management, and increased profitability.
The analysis should assess challenges related to adherence to current sector and corporate governance obligations. The analysis will also assess the current senior management organizational structure and the Board of Directors oversight responsibilities qualifications. In addition, the analysis should comment on the role and status of the new regulator to improve sector electricity sector performance and governance. Ultimately, USAID’s goal is to help create a viable energy sector, where DABS can meet the country’s rapidly growing electricity demand with reliable, affordable service.
This assessment should result in actionable, prioritized governance and senior management team recommendations for future USAID programming. The assessment should focus on the DABS Board of Directors (the Board), other DABS governance boards (audit, appointment, procurement, etc.) and DABS senior management positions, with recommendations related to senior management performance improvements in operations, financial management and strategic planning. The full range of best practices to improve governance and senior management performance should be considered, including potential private sector participation in utility management and service delivery. The recommendations should consider the political willingness and potential commitment from DABS senior management, the Board of Directors, MEW, MOF and other sector stakeholders.
The assessment should determine the degree to which the Board and its constituent shareholders are willing to establish key performance objectives for the DABS senior management team, and to use their legal authority to monitor and take necessary actions in achievement of DABS key performance goals. This reflects the traditional role of a board of directors in appointing senior managers, establishing high level business objectives, and monitoring achievement of these objectives. The assessment should also consider capacity building related to governance and the senior management team that the Government of Afghanistan, the board and DABS need to strengthen corporate governance oversite and senior management performance. The assessment should also determine the degree to which the Executive Board is structured and functions in a manner that meets best practices for public power utilities.
In addition to the objectives stated above, USAID also intends to use this assessment to determine what steps related to corporate and sector governance can be taken to increase private sector participation in Afghanistan’s electricity sector.
- Desk review/research: This period will focus on review of the following to determine specific key constraints to effective power sector governance and management:
- Current corporate governance structure of DABS, including review of existing corporate governance documents.
- The policy and regulatory framework governing the Afghan power sector, with specific review of the current and proposed laws establishing a regulatory process for setting tariffs and incentivizing efficient utility operations.
- Previous and ongoing donor-led activities to improve the capacity of DABS and create the framework for regulation of the energy market, determining root causes for successes and failures.
- Performance reports, project evaluations, and other sector assessments related to DABS operations, financial management, planning and other management and executive responsibilities stated in its Articles of Incorporation.
- Assessment implementation: The assessment will focus on answering the following questions aligned to two work streams and offer actionable recommendations for both short-term and long-term interventions:
- Workstream 1: DABS corporate governance and senior management:
- To what extent are current corporate governance arrangements being implemented? What are the key areas of governance and senior management weakness? This will include consultation of important Afghan stakeholders directly involved in DABS corporate governance and senior management matters.
- What are the possible USAID interventions in governance that would enhance viability of DABS? Interventions refers to two separate categories of USAID action: advocacy and technical assistance. Advocacy may include USAID and U.S. Embassy engagement with key electricity sector stakeholders on matters related to improved corporate governance and management.
- Are there any specific improvements are necessary to DABS governance structure, such as to DABS Articles of Incorporation and Corporate Bylaws?
- What major challenges exist within DABS governance and senior management processes for capital planning, financial management, and operations that impact the financial viability of the utility?
- What role can DABS Executive Board, other DABS boards, shareholders and senior management take to encourage greater private sector participation in the electricity sector? Are there major barriers that need to be addressed at these levels, including lack of planning?
- How can building the capacities of DABS employees in corporate governance and strategic planning be best delivered for sustainable results?
- Do senior management positions have job description? Are there performance goals for senior managers? Do the senior managers have performance goals for their direct report? How are those goals measured, monitored and reported? Do senior managers have assigned budgets and how are those budgets tracked and reported to the Board? Are levels of authority clearly defined by the Board and communicated to the senior managers? Do senior managers participate in developing strategic goals for DABS? How are those strategic goals communicated throughout DABS? How do senior managers communicate goals and objectives down through their organizations? Are their feedback mechanisms for senior managers to gain understanding of issues in their organizations?
- Workstream 2: Broader power sector governance and regulation:
- How can the varying roles and responsibilities within the energy sector be aligned with international best practices?
- How should the roles of MEW, MOF, DABS, and other key associated institutions be aligned and/or clarified?
- What is needed to ensure regulatory statutes and industry best practices are implemented?
- Is there a national energy strategic plan? What responsibilities are assigned to MEW, MOF, and DABS for implementing that plan? Is that plan supported politically?
- What barriers interfere with effective governance and implementation of regulation?
During implementation of the assessment, the team should hold roundtable discussions with key stakeholders involved in DABS corporate and sector governance. In addition, the team should also consult Afghan private sector corporate executives involved in the electricity sector to gain an understanding of their views on both corporate and sector governance.
- Out-brief with Mission and report writing: The team will conduct an out-brief with the Mission and write a report that outlines the core components of the assessment, including specific next steps that explain how the assessment can be implemented. A draft shall be submitted to USEA 20 business days after the start of this task. USEA and USAID will provide comments back to the contractor after 10 business days and then a final draft will be sent to USEA five days after receiving USEA’s and USAID’s comments.
(1) Governance refers in this RFP to the standard utility industry concepts of the governance arrangements, procedures and actions associate with a public utility. Key features establishing governance regimes for utilities include articles of incorporation, shareholders agreements, corporate bylaws, national companies laws. In addition, boards of directors play a central role in utility governance by holding and exercising the authority to establish corporate objectives, approve strategic actions, and appoint senior management for a utility.
(2) Senior management in this RFP refers to the officers appointed by the board of directors. These are usually the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Chief Commercial officer of a utility.
(3) In this RFP, “senior management” refers to DABS senior management team and the high level senior management activities and systems, such as corporate financial management and reporting, independent financial audit, corporate planning and budgeting.