Tuesday, September 18, 2007

Emerging Markets' Fast Growth Triggers Electric Utility Boom

From IBD via CNNMoney:
Some developing countries are waking up to a big problem: Power shortages could short-circuit their economic growth.

In Latin America and elsewhere, governments have been restructuring utilities to spur private and foreign investment. Heavy-handed regulatory policies are being replaced by market-based systems that give utilities higher returns on investment.

Hiking electricity rates is a tough political step for governments in countries where much of the population still lives in poverty. But, emerging markets need to build more power plants and modernize infrastructure.

"In most developing countries, power demand grows more quickly than the economies," said Jed Bailey, managing director of the Asia and Latin America groups at Cambridge Energy (OOTC:CNGG) Research Associates. "To get investment in place, there's a sense that regulatory structures will evolve and prices on average will go up."

But after running up for much of the year, shares in Latin American utilities traded on the New York Stock Exchange have retreated along with stocks worldwide...Much More