This paper was produced at the requestof the Government of Uganda, as part of the ESMAP PowerRestructuring Implementation Strategy in the country. Onlooking at the key factors that influence the privatesector's evaluation of, and investment in powerdistribution firms worldwide, and, on the implications ofthe optimal role of multilateral institutions such as theBank, this report provides the results of a study that PriceWaterhouse Coopers Securities implemented on the subject, toassist the Bank in developing its policies regarding powerdistribution. Fundamental differences between distribution,and generation companies are highlighted: distributioncompanies must concern themselves with demand growth, retailmarkets, and customer concerns; while generation firms, tendto focus more on technical, and performance issues (ownerseparation from each segment of the industry, generallyincrease efficiency, and minimize undue market power).Surveys on overall country status, regulatory and legalframework, business practices and financial performancesworldwide, show that while laws, and legislative systems areimportant factors (in their ability to repatriate funds -though arguably a part of the investment climate), financialperformance stood by far, as the most important factor,i.e., the return on equity is critical, especially forpublicly held investors, who must assess the impact ofinvestments on stocks valuation. The role of multilateralinstitutions was seen as important in that it improves theinvestment climate through technical assistance, in that itpromotes processes to achieve privatization, andrestructuring country wise, and, in that it providesfinancing for power sector projects that require subsidies.
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