Customer Selection
Processing procedure

Under the Fund, SHS system sales on PAYG shall be governed by the credit policies
specified in the manual of a particular PO. Since the PO takes the full credit risk for default
and delayed payments, PAYG processing and approval will be the sole responsibility of
the PO. All potential households shall approach the PO directly or be identified by the PO
sales agent with request (application) for consideration

Customer Selection

Customer selection is the sole responsibility of the PO. The POs will target off-grid areas
as specified. The PO shall handle enquiries arising out of outreach
and promotional activities by providing additional information and explanation on the
requirements of the project and of the PO to potential consumers in the targeted off-grid
areas. The PO shall assess these customers to determine their potential to benefit from the
financial services available under the project

Loan Amount
Loan amount shall be based on the customer’s ability to repay as assessed by the PO and shall be tied to the cost of a particular SHS. Based on this, the loan amount shall include the cost of supply and installation, maintenance of the SHS, according to the terms and conditions as agreed between Fund Manager and the POs
Loan Appraisal
The loan appraisal shall be mainly based on a quantitative assessment of the customer’s ability to repay the loan. In evaluating risk, the PO shall take into consideration the buy- back value of the used SHS The loan must be approved by a designated authority of the PO. The approval may consider the customer’s ability to make a down payment of 7% (on an average) of the cost of the SHS.
End user Pricing
The RBF grant is primarily expected to cover the commercial viability gap of availing SHS systems for poor households. Grants thus shall be fully used to reduce end-user pricing and applicants for enlistment of POs must present their pricing scheme as part of the application process. The selected POs must present a non-subsidized PAYGO price and also a non- subsidized cash sales price (if applicable). The grant amount shall be deducted from the unsubsidized PAYGO or cash price, depending on their business model and the timing for grant disbursement.
The POs will be required to report on their pre-grant price, their subsidized price, the customer contribution and the means of customer contribution (i.e. upfront or PAYGO installment) as part of the regular reporting to Fund Manager and in the disbursement claim forms for the RBF grants. This information will be treated as confidential and used only for operational purposes of the NNNF
Contracting
Upon approval of the loan, the PO will sign an agreement with the customers specifying their respective obligations, rights and recourse. The PO will be expected to install and through after sales services, maintain the SHS during the loan period with due diligence and efficiency and in accordance with sound technical, engineering, environmental and social safeguards, as well as financial, and managerial practices.
Authorization to installl
Loan approval is contingent on the customers depositing the applicable down-payment. After execution of the sell/lease agreement with the customer and deposit of and down- payment, the PO will authorize its staff to proceed with installation.
Obtaining Funds
The PO will submit a disbursement request for the RBF grant to the Fund Manager for the systems installed in a particular period (e.g., in a month/quarter) in a form specified in the Participation Agreement. The Fund Manager will disburse the fund into the designated proceeds account after verification by IVA
Recovery
When a customer fails to make regular repayment as per the agreed schedule, the PO shall institute steps to collect or recover the overdue loan amount. Any failure to collect outstanding payments would not affect the PO’s obligation to repay loans to the Fund on time.
Procurement
It is the responsibility of the POs to procure Tier 1 and above SHS equipment that is certified by VeraSol
Insurance
POs will take necessary insurance coverage, as applicable, for all equipment procured under the project.