1. Is your project investable? Key tips to make sure it is. 15 th March 2016 A Presentation at Power and Electricity World Africa conference, Sandton Convention Centre South Africa Presented by Paul Mwesigwa Chief Finance Officer Uganda Electricity Distribution Co. Ltd

2. Scope of the presentation 1. A closer look at asset prices 2.How to highlight the opportunity and ROI 3.Moving away from a one-size-fits-all approach to attracting investment 4.It’s about more than just money 5.Be prepared to negotiate

3. Why Invest? Profit and/or Sustainability Private!! Who is to do the Investment? Government!!

4. Global trends to make an Investment Qn. Is it Private or Gov’t; what affects the decision? Self sustainability is Key=> Cost recovery plus maintenance; this will affect the asset pricing regardless of the funding source 1.Domestic revenues/Taxes from the consolidated collection fund 2.Borrowings from any source 3.Public Private partnerships. 4.Grants etc. 5.Private investment.

5. The SWOT Analysis Vs Risk Matrix Treat all kinds of investment as a PROJECT; That should bear time frame, specific objective and expected results => ROI/Tax base Clear review for the Strength, Weaknesses, Opportunities and Threats on a continuous basis even after commissioning. How many have done this aftermath review? e.g on a generation plant, distribution facilities like:- power lines, water, roads, railway etc. Risk matrix is paramount; plus continuous reviews for compliance to the mitigation strategies.

6. Government Investments This could either be through:- 1.Parastatals; 100% Limited Gov’t owned company -> Initial investment required, then thereafter initial investment recovery and profit making is a MUST. How? Do the right pricing/tariff at inception or after grace period. 2.Government Departments/Ministries; Always financed annually from Taxes, Government borrowings, Grants etc. 3.Public Private partnerships;

7. The Common Trap to Gov’t Inv’ts Over Capitalization with LESS and/or NO working capital Among the impact and indicators; Borrowing in order to carry out repairs and maintenances e.g replacing aged or fully depreciated equipment like:- Substations, Water pumps, street/traffic lights, generation turbines etc. Capital Investment Revenue generated

8. Private Investment Source of funding may either be Equity, borrowing and/or others. ROI is a Must for sustainability => Shareholder’s interests Capital InvestmentRevenues and ROI

9. Forget !!...“one-size-fits-all” BUT There are other factors that needs to be analyzed in order to attract investment, they could be internal and/or external to the investing body:- Is the asset among the major back borne of the country? Roads, railway, electricity etc Technological changes Regulatory environment Effective policy frame work; e.g. Licenses for operation, Environment, safety and occupancy clearance, etc. Climate Change and Variability

10. Forget!!.. “one-size-fits-all”…… Cont…. Access to Primary resources; labour, materials, Affordability Vs the per capita income for the targeted market. Net present Value: Net Investment Vs Inflows ->ROI Social Impact; population life hood, education, health etc Other infrastructures; roads, railway, pipelines, water etc. Economic impact; job creation -> down streams of those jobs for future sustainability Political environment Tax policy and treatment.

11. Key Guideline for investment to succeed. 1.Good negotiation skills and teams; -> BOTH PRIVATE AND GOVERNMENT INVESTMENTS 2.Best practice backed with Good corporate governance; -> NO SHORT CUTS!!! 3.Do the Right strategy; -> Target a self sustainable environment => SUBSIDIES MAY BE FOR A DEFINED TIME.

12. Lessons learn ’t Example; Both Private and Concessional financing into the generation and distribution energy sector in Uganda is ongoing after the unbounding program during earlier 2000s. Achievement; Energy supply stability has significantly improved with more investment in the sector. Major Challenge: Huge capital investment required, thus affordability of the end user tariff, that has increased from an AVG of Shs180 per unit (2005) to Shs650/= per unit (2016). At the same time a devaluation of a USD exchange rate from 1,740/= to now 3,350/=.

13. . Conclusion; For most of the infrastructural investments, the key objective has been to have security and/or reliable supply, BUT affordability and sustainability has remained a challenge with minimum solutions.

14. Thank You