Shareholders wary of niggling constraints as power distributor tables Shs 1 trillion capital investment plan. In his light-blue shirt and dark blue neck tie, Charles Chapman, Umeme's managing director, cuts a confident figure that belies the pressure he is clearly under.

Chapman, along with his juniors, got a little dose of the high expectations the company's shareholders have at the power distributor's meeting in Kampala on March 5.

Coming only weeks before the company releases financial results for the year ended December 2012 following its initial public offering in November last year, expectations about possible dividends were high. But Chapman and his team had other ideas.

"We shall talk about everything about Umeme except the 2012 financial results," Chapman told the over 100 participants at the meeting. "Those we shall discuss when we release them at the end of this month and later in our first annual general meeting in April."

However, that did not deter the participants from tasking Chapman and his juniors to answer several ticklish questions and to show proof that their company's affairs were sound and it had a bright future. Indeed, the company has been under the spotlight in recent times particularly over the huge power losses and a contentious contract, and more so at a time when the need to increase capital investment and pressure to expand the electricity distribution network is more urgent than ever.

But without giving specific details, Chapman looked confident as he talked big about growing customer numbers while maintaining a quality service, cutting power losses, increasing capital investments, putting up new power lines and repairing the existing ones and rolling out the prepaid metering system across the country.

However, a good chunk of the money that was mobilized from the IPO was used to pay off a $27m loan to its majority shareholder, Actis, a British private equity firm. But even then, he suggested that the company was in "a better position" to focus on investing in the power network and reward its new shareholders. That made the prospect of dividends in the short-term highly unlikely.

The firm has invested $159m (Shs 415bn) as of June 2012, up from $6m (Shs 15bn) in 2005 and plans to up this figure to Shs1tn by 2017 on the back of the rising demand for power. The company plans to double its customer base from the current 500, 000 by 2017 - all that requires vast amounts of money, but the officials said they are up to the task.

"The demand for electricity is enormous," Chapman said. "Maybe the problem will come from the generation side; for us we are ready to invest heavily and serve the growing numbers."

The new power dams - including the 250MW Bujagali dam and the 9MW Buseruka dam among others - have brought some hope, but Chapman sees the 600 MW Karuma Dam as the ultimate deal for a significant boost in energy supply.

"And if there was any one responsible for hurrying up the construction of Karuma dam, they would do so to aid the sector's growth," Chapman said.

But given that Umeme's prime customers are the industrialists who consume 70% of the power supplied with 20% is consumed by other customers including government and commercial consumers, the company can be forgiven for having little motivation for increasing distribution to smaller consumers.

Power loss pain:

While the company says it has reduced power losses from a high 38% in 2005 to 26% in June 2012, the losses are still high compared to Kenya's, which stands at just 15%. That is a key concern of the company's over 6,400 share holders, which Sam Zimbe, the general manager, corporate & regulatory affairs, said would be partly addressed by connecting all consumers to prepaid meters by 2015.

The demand for a specific slot on the board was a clear sign from the shareholders of their desire to protect their interests and the issue is expected to be high on the agenda at the forthcoming annual general meeting.

After listing on the Uganda Securities Exchange (USE) with an oversubscription of 37%, the company went ahead to cross-list on the Nairobi Securities Exchange in Kenya. The cross-listing was intended to facilitate trading of Umeme shares, improving liquidity of the stock while offering investors multiple platforms to manage stocks and trading on both the USE and the NSE.

However, given the lack of infrastructural support available across the region, investors have not been able to access and transfer stocks from one bourse to another, thus putting off potential investors from becoming involved with cross-listed stock knowing that trading in the region would be challenging.

David Alderton, the corporate development manager at Umeme, said the proposed structure for facilitating trade for cross-listed companies is under review by the regulators and its implementation was expected to begin as soon as possible.

For the Kampala bourse, the company has continued to dominate trading. Its share price has somewhat appreciated to Shs 300 up from the IPO price of Shs 275. Over 42 million shares have been traded on its counter since the launch with a value of Shs 12bn.

Umeme's capital investment (US $):

Year 2005 2006 2007 2008 2009 2010 2011 2012-June

Capital Invested (bns) 6 11 29 52 80 102 134 159

Energy losses since 2005 (%)

Year 2005 2006 2007 2008 2009 2010 2011 2012-June

Movements 38 34 35 34 35 30 27 26

Source: Umeme