UNDP		Tender

Tender

Ref. No: 00014640

Title: Development of a business plan for coal methane recovery and utilization company

Agency: UNDP

Project: 00014640: Removing Barriers to CMM Recovery and Utilization

Location:

Duration: Duration of Assignment from September 1, 2007 to November 1, 2007

Date of Expiry: 2007-08-30

Description: The goal of this job is analysis and evaluation of scenarios of business development (of a service company for coal mine methane extraction and utilization (CMMRUC) that will offer services targeting improvement of degasification systems and utilization of captured methane to coal mines.

Justification. Recently there have appeared serious incentives for effective implementation of coal mine methane extraction and utilization projects in Russia:

• explosions at coal mines have caused stricter requirements to mining safety and, subsequently, to degasification systems;
• a necessity to reduce social tensity triggered interest to the issue of the local and federal authorities;
• ratification of the Kyoto protocol by Russia and adoption of procedures for approving and registering projects will allow to attract substantial additional investments;
• raising fines for methane emissions into the atmosphere raised economic efficiency for methane utilization projects.

Main barriers for such projects lie in the area of mine managers’ unwillingness to invest in new initiatives, which is caused by their inability to assess project risks and profits. Besides that coal mining companies do not want to take additional liabilities (investment into new technologies that they are not familiar with).

Currently, a UNDP/GEF project "Russia - Removing Barriers to Coal Mine Methane Recovery and Utilization" is being implemented in Russia. The project envisages carrying out demonstration projects in the field of coal mine methane extraction and utilization. CMMRUC will be capitalized using UNDP funds will be an implementing agency for such projects.

The main goal is to single out advantages and risks, to assess different options for CMMRUC capitalization with and without attracting co-investors.

Desription of CMMRUC services. The range of services may include all work related to the project, from with technical support in preparing investment application, including carbon documentation to full turn-key projects (including project and design, degasification construction and commissioning of utilization equipment).

Equipment (drilling equipment, gas generators, modular boiler stations) may be property of CMMRUC while coal mining companies pay for degasification services and heat/electricity on commercial basis. Alternatively, it can be leased or purchased by coal mining companies.

The following services provided by CMMRUC can be singled out.
Project and design:

• development of technical and economic validations and approvals for coal mine methane extraction and utilization systems;
• development of carbon documentation (PIN, PDD);

Degasification:

• drilling degasification wells;
• renting out or leasing drilling equipment;

Utilization:

• supplying and installing coal mine methane utilization systems (search for equipment, transportation, construction and commissioning);
• operating coal mine methane utilization systems;
• renting out or leasing utilization equipment (gas generators, modular boiler stations);

Middleman activities:

• operator role while selling drilling equipment and utilization systems.

Contents. The business plan should include:

Analysis of consumers’ demand

• Analysis of consumers’ demand for CMMRUC services
• Description of services existing in the market, assessment of their advantages and drawbacks
• Analysis of main advantages of CMMRUC compared to competitors
• Analysis of internal resources required to stimulate coal mine methane utilization
• Legislative and regulatory framework of CMMRUC activity
• Listing and analyzing barriers, risk assessment

Development of a strategy of CMMRUC creation and operation, its positioning

• Determining key players in the market and assessment of possible ways of cooperation
• Assessment of acceptability and ways of possible participation by key players in CMMRUC creation
• Development of scenarios for CMMRUC positioning in the market, evaluation of its advantages and risks in different scenarios
• Development of recommendations for strengthening positions and stimulating CMMRUC activity after entering the market
• Evaluation of tactics to attract new customers in Russia and abroad

Requirements to the business plan. The business plan should consider federal and regional legislation, regulatory documents for energy and coal mining industries, safety, environment protection and local and federal policies in the field of CMMRUC activities.

Tools for market research must be preliminarily approved by the Contractor.

Result. The developer submits a Report to the Contractor which includes

• A report evaluating different strategies for creating and operating CMMRUC.
• A business plan of developing CMMRUC in the basis of a chosen scenario. Subcontractor submits 5 copies of the document on paper and CD in Russian (the business plan in both Russian and English).
• An electronic presentation of the Report. In PowerPoint on CD (5 copies).
• All the collected preliminary information (questionnaires, meeting notes, copies of the interviews, names of organizations, name of the expert and contact data).

Work should be submitted to the Contractor in the form of a presentation and Report defense at an extended Coordination Committee meeting of the UNDP/GEF project "Russia - Removing Barriers to Coal Mine Methane Recovery and Utilization".

Work accomplishment. September 1, 2007 – November 1, 2007

Requirements to the Subcontractor. The subcontractor should have substantial experience in marketing research, business planning, technical and economic justifications in the coal mining industry and other industries, with consideration of international standards.

Terms of reference:

Contacts: Please submit your applications to Ms. Irina Bredneva, Programme Associate, Environment Unit, at Irina.bredneva@undp.org, fax: +7 495 7872101

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