In the March edition of Infrastructure Outlook – Standard & Poor’s monthly newsletter rounding up all the key rating actions and research relevant to infrastructure and project finance – Karim Nassif, an S&P associate director based in Dubai, explains that the Gulf Corporation Council is having to re-think its approach to developing the region’s infrastructure. He explains in the main feature that, as oil prices remain low – which in turn retracts public spending and bank lending – governments are falling short when it comes to providing key project finance. Consequently, they are increasingly looking to the private sector to help foot the sizable infrastructure bill. What is more, if lower oil revenues bring about reductions in national fuel subsidies – a possibility that Nassif flags as likely – the boost for renewable energy could be considerable.
Indeed, considering recent international agreements to reduce global greenhouse gas emissions, renewable energy is covered significantly in this issue. A focus is S&P’s first ever rating assigned to an offshore wind project. Wind MW GmbH, more commonly referred to as Meerwind, located in the North Sea, was recently issued a ‘BBB-’ rating. And in another prominent article, Michael Ferguson, associate director, discusses the risks associated with offshore wind projects and why they are becoming a more prominent part of power-generation grids worldwide.
In other news, we see that U.K. energy company Centrica’s outlook revised to ‘negative’ from ‘stable’, on the back of low oil and gas commodity prices, as well as declining forward power prices.
On the project finance side of things, the Scot Roads Partnership project – which is completing the Central Scotland motorway network – had its issue rating lowered to ‘BBB+’ from ‘A-‘ following construction delays.