Advanced Search
MyIDEAS: Login to save this article or follow this journal

The evolution of infrastructure and utility ownership and its implications

Contents:

Author Info

  • Dieter Helm
  • Tom Tindall
Registered author(s):

    Abstract

    The paper documents the significant changes of ownership since the infrastructure utilities were privatized and, in particular, the shifts from the initial focus on dispersed retail share ownership through takeovers to more concentrated ownership and the emergence of private equity and infrastructure funds. In the process, there has been substantial financial engineering and balance sheets have been geared up towards exhaustion, with major implications for financing future investment. Increased gearing has, on the one hand, introduced the discipline of debt upon management which had engaged in substantive diversification, and on the other provided an arbitrage between the weighted average cost of capital used to calculate the allowed return, and the lower marginal cost of debt. The paper shows how regulation has determined the allocation of risk, and facilitated the observed changes in ownership and financial structures. Three solutions to the exhausted balance sheets are considered to finance future investment: rate-of-return regulation; the split cost of capital; and a collapse back into not-for-dividend, mutual or state ownership. The default outcome already witnessed in the Welsh Water and Network Rail cases is the latter case, which is inferior to the second option. Copyright 2009, Oxford University Press.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://hdl.handle.net/10.1093/oxrep/grp025
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

    Volume (Year): 25 (2009)
    Issue (Month): 3 (Autumn)
    Pages: 411-434

    as in new window
    Handle: RePEc:oup:oxford:v:25:y:2009:i:3:p:411-434

    Contact details of provider:
    Web page: http://oxrep.oupjournals.org/

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Tan, Jeff, 2012. "The Pitfalls of Water Privatization: Failure and Reform in Malaysia," World Development, Elsevier, vol. 40(12), pages 2552-2563.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:25:y:2009:i:3:p:411-434. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.