Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Energy and ports are infrastructure cash cows in Finland

14.11.2011
The study carried out by VTT Technical Research Centre of Finland, Aalto University and University of Oulu investigated the ownership and governance structure of Finnish infrastructure networks and utilities. A part of the research focused on investors' and owners' returns.

29 municipal and state owned units, limited companies and some private entities were analysed using the financial statement data for 2002-2009. The study covered water supply, roads, streets, ports, airports, railways and energy networks. The report annexes even wider empirical material.

According to the research, the cash-based returns has been very stable during the studied period (2002-2009). The volatility of the cash flows has been almost risk-free compared to investments in Finnish stock markets.

The best sectors were energy with its average annual cash-based return of 13% for the invested total capital and ports with about 10% average annual return.

The study also looked into the returns of state-owned companies. VR, the national state-owned rail operator yielded to 5% average annual cash-based return on invested capital. Accordingly Finavia, the state's airport owner returned annually 4% on average, and the state-owned road contractor Destia about 7%.

The form of ownership has a clear effect on returns. The ownership models covered traditional municipal entities, municipality and state owned companies as well as fully private units. Traditional public entities had the best cash-based returns to their owners. Municipal ports exceeded with about 4%-units the returns provided by municipal limited liability companies for the period of analysis. Difference of same magnitude was identified with waterworks.

The differences can be explained largely by different accounting practices. With limited liability companies, the accounting standards are dictated strictly by different laws and generally accepted accounting principles whereas the accounting of municipal units and enterprises follow a more liberal practice. The latter entities are mostly exempted from taxes and have more freedom to return profits to their owners. In the long run, however, these liberal practices may lead to "over-milking" of the utilities, hence resulting a risk of under-investments in infrastructures. Many municipalities and cities are concerned for example on the technical condition of water supply network.

The researchers recommend that accounting practices should be more specific in terms of reflecting the technical condition of the infrastructure and making it sure that necessary investments are not neglected while seeking high returns. On the other hand it is evident that municipalities and cities have financed some of their basic services – such as education or healthcare - with the help of revenues raised from infrastructure and utilities.

The Finnish Ministry of Finance has initiated last year a proposal to renew the legislation on municipal enterprises.

Media material: Financial performance of Finnish technical networks
http://www.vtt.fi/news/2011/20112510_energia_ja_satamat_tuottavat_
infrastruktuurista

Pekka Leviäkangas | EurekAlert!
Further information:
http://www.vtt.fi

More articles from Studies and Analyses:

nachricht Multi-year study finds 'hotspots' of ammonia over world's major agricultural areas
17.03.2017 | University of Maryland

nachricht Diabetes Drug May Improve Bone Fat-induced Defects of Fracture Healing
17.03.2017 | Deutsches Institut für Ernährungsforschung Potsdam-Rehbrücke

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Giant Magnetic Fields in the Universe

Astronomers from Bonn and Tautenburg in Thuringia (Germany) used the 100-m radio telescope at Effelsberg to observe several galaxy clusters. At the edges of these large accumulations of dark matter, stellar systems (galaxies), hot gas, and charged particles, they found magnetic fields that are exceptionally ordered over distances of many million light years. This makes them the most extended magnetic fields in the universe known so far.

The results will be published on March 22 in the journal „Astronomy & Astrophysics“.

Galaxy clusters are the largest gravitationally bound structures in the universe. With a typical extent of about 10 million light years, i.e. 100 times the...

Im Focus: Tracing down linear ubiquitination

Researchers at the Goethe University Frankfurt, together with partners from the University of Tübingen in Germany and Queen Mary University as well as Francis Crick Institute from London (UK) have developed a novel technology to decipher the secret ubiquitin code.

Ubiquitin is a small protein that can be linked to other cellular proteins, thereby controlling and modulating their functions. The attachment occurs in many...

Im Focus: Perovskite edges can be tuned for optoelectronic performance

Layered 2D material improves efficiency for solar cells and LEDs

In the eternal search for next generation high-efficiency solar cells and LEDs, scientists at Los Alamos National Laboratory and their partners are creating...

Im Focus: Polymer-coated silicon nanosheets as alternative to graphene: A perfect team for nanoelectronics

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are less stable. Now researchers at the Technical University of Munich (TUM) have, for the first time ever, produced a composite material combining silicon nanosheets and a polymer that is both UV-resistant and easy to process. This brings the scientists a significant step closer to industrial applications like flexible displays and photosensors.

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are...

Im Focus: Researchers Imitate Molecular Crowding in Cells

Enzymes behave differently in a test tube compared with the molecular scrum of a living cell. Chemists from the University of Basel have now been able to simulate these confined natural conditions in artificial vesicles for the first time. As reported in the academic journal Small, the results are offering better insight into the development of nanoreactors and artificial organelles.

Enzymes behave differently in a test tube compared with the molecular scrum of a living cell. Chemists from the University of Basel have now been able to...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

International Land Use Symposium ILUS 2017: Call for Abstracts and Registration open

20.03.2017 | Event News

CONNECT 2017: International congress on connective tissue

14.03.2017 | Event News

ICTM Conference: Turbine Construction between Big Data and Additive Manufacturing

07.03.2017 | Event News

 
Latest News

Argon is not the 'dope' for metallic hydrogen

24.03.2017 | Materials Sciences

Astronomers find unexpected, dust-obscured star formation in distant galaxy

24.03.2017 | Physics and Astronomy

Gravitational wave kicks monster black hole out of galactic core

24.03.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>