Regulatory uncertainty dims prospects for transport infrastructure, utility companies: S&P

MELBOURNE - Asia-Pacific's evolving regulatory and policy landscape looms large for regulated utilities and transportation infrastructure companies, according to a new report by ratings agency Standard & Poor's .

"We believe governments in Australia, China, and Japan are likely to focus on attracting private sector participation to develop their transportation infrastructure," S&P credit analyst Thomas Jacquot said. "However, Japan suffers from excessive regulation in the sector, while China's toll-road operators face policy uncertainty after the government clamped down on perceived high toll rates.

“In Australia, the poor track record of greenfield road projects is likely to deter investors - four of the most recent ones defaulted shortly after launching. We believe projects will have to develop a predictable and stable track record to lure private investors.

"Meanwhile, Asia-Pacific's utilities sector is seeing changing policies concerning carbon emission levels, use of nuclear power, and renewable energy targets, which present short-to-medium term risks to the sector. In addition, Asian utilities are contending with high energy costs, the direction and predictability of tariff paths, and the challenge of generating sufficient returns from their large investments." www.standardandpoors.com (ATI).