Photo source: Paul Hipwell
The Office of Fair Trading has announced a stock-take of ownership and control across economic infrastructure including water. Its aims are sensible to:
- Map ownership and control of the infrastructure
- Assess how ownership affects outcomes for consumers
In the water sector there has been major change in the ownership structure since privatisation. Generally the investment by infrastructure funds such as J P Morgan or the Canadian Pension Investment Board has brought stable long term ownership to the sector and should be welcomed.
From a consumers viewpoint there are two main concerns. Firstly the various covenants associated with the debt provision do restrict the freedom of the regulator to dramatically change the regulatory structure of the sector making the introduction of the recommendations in the Cave review very difficult to achieve in practice. Secondly, its clear the water sector has been highly attractive to investors and that the stable returns of around 11% for negligible risk are excellent. The question is: are customers having to pay too high a price?
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