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Sustainable finance
Severn Trent Water and National Grid have today published a discussion document about how the 40-50 billion pounds a year that the Government believes needs to be invested in infrastructure can be funded without increasing financial risks to taxpayers or customers of utility companies.
This comes at a time when reliable infrastructure is not only seen as vital to every home and critical to a competitive economy, but investment in that infrastructure is recognised to be key to stimulating economic growth. The purpose of the document is to start a debate about “how” the private sector can best deliver.
The report asserts that the private sector can efficiently deliver the investment required to improve the UK’s energy and water networks, but that it should be encouraged to do so in a way that incentivises shareholders to invest their own money, where appropriate, and not always to rely solely on increasing already record levels of industry debt.
The report suggests that UK policy makers should consider changes to the incentive framework for regulated utilities to encourage the retention and investment of shareholder capital, as well as regulatory changes to give greater confidence that long term returns will justify equity investment and that there will be a realistic approach to financeabilty and cash flow requirements.
