2001年-世界发展银行全球_Key_Factors_for_Private_Sector_Investment_in_Power_Distribution_34页_1mb

Key Factors for Private Sector Investment in Power Distribution Summary

Introduction

This ESMAP technical paper, prepared by PricewaterhouseCoopers Securities for the World Bank in October 2000, focuses on the key factors influencing private sector investment in power distribution companies globally. It was commissioned as part of the ESMAP project, "Uganda: Power Restructuring Implementation Strategy." The report highlights the importance of aligning private investment with both national and customer objectives, as well as shareholder interests, aiming for a "win-win" scenario.

Methodology

PricewaterhouseCoopers conducted a survey and interviews with leading private sector companies involved in power distribution investments. The methodology included:

• Identifying potential companies for participation and obtaining the World Bank's feedback.
• Selecting key issues that affect investment decisions and grouping them into eight major factors.
• Distributing a survey to top decision-makers in target utilities and following up to ensure completion.
• Conducting detailed interviews based on survey responses.
• Compiling the results into a draft report.

The survey responses were rated on a scale of 1–10, with scores of 7.5 or above considered "high" importance, 6.0–7.4 "moderate," and below 6.0 "low."

Key Factors Influencing Investment

The following eight factors were identified as crucial in the private sector's investment decision-making process in power distribution:

1. Overall Country Status

   • Political stability and economic growth prospects are highly important.
   • Sub-factors include employee security, currency convertibility, and income disparity.
   • Investors prioritize a stable and improving investment climate, legal framework, and regulatory stability.

2. Regulatory Issues

   • Regulatory framework maturity, performance standards, and regulatory review timing are critical.
   • Investors prefer long-term franchise agreements (5–7 years) with guaranteed rate stability.
   • They are wary of political interference and "bait and switch" tactics.

3. Laws and the Legal System

   • Ability to repatriate funds and the restructuring process are important.
   • Access to legal recourse through courts or arbitration is essential.
   • Legal clarity and predictability are seen as part of the investment climate.

4. Condition of the Target Company

   • Technical and non-technical losses, investment requirements, and performance indicators are key.
   • Investors prefer companies in poor condition to demonstrate potential for improvement.
   • Performance indicators include technical losses, theft levels, collection rates, and reliability.

5. The Tendering Process

   • Majority control is the most important factor (score 9.1).
   • Limited competition and negotiation preference are also significant.
   • Investors emphasize the need for management control to implement necessary changes.

6. Resource Availability

   • Health of the power sector and availability of power supply are important.
   • Investors look for a robust and sustainable resource base to support long-term operations.

7. Likely Financial Performance

   • Return on investment and its stability are critical.
   • Ability to finance operations and manage risks is also important.

8. Features of the Investing Company

   • Alignment with corporate strategy and synergy with other businesses are important.
   • Investors prefer opportunities that allow expansion into related sectors like telecom or water.

Main Findings

• Most private sector investment in power distribution has occurred in developed countries, with limited activity in Asia and Africa.
• Latin America dominates distribution privatization, while Asia remains underrepresented.
• A strong case is made for privatizing distribution before generation to ensure viable offtakers and reduce reliance on government guarantees.
• Investors generally avoid countries with political instability or economic turmoil.
• Public education programs are recommended to prepare customers for rate changes and service improvements.
• Investors are willing to take on the costs of upgrades, such as metering, but expect governments to support the transition for current employees.
• In some countries, like the Philippines, foreign ownership limits (e.g., 40%) are in place, but minority shares must still convey control to attract investment.

Conclusion

The report underscores the importance of a stable regulatory environment, a supportive legal system, and a clear investment climate for private sector participation in power distribution. Investors seek opportunities that offer long-term stability, financial viability, and the potential for improved service and efficiency. The World Bank and ESMAP are encouraged to support countries in creating these conditions to attract private investment and promote sustainable energy development.