Because it involves structural change in the industry, however, it might be considered a case for reference.PowerGen informed ministers that it wanted to bid for a regional electricity company as long ago as July The guidance it got went along these lines: ” Go ahead. Consolidation of the industry is both an inevitable and a good thing since it creates a more efficient structure. The commercial logic of its bid for Norweb has always been questionable; the more it is forced to offer, the harder to take seriously it becomes. Shareholders in North West might well want to thank the Americans should they eventually force North West into a dignified retreat. There was little evidence of such second thoughts from Sir Desmond Pitcher and his team yesterday, however; they seemed to be preparing for prolonged trench warfare.North West shareholders can only hope that Ian Lang, President of the Board of Trade, will come to their assistance and call a halt to Sir Desmond Pitcher’s vaulting ambition Of this, there is some possibility.

Until the Americans entered the equation, North West’s bid seemed destined to end up before the Monopolies and Mergers Commission. Ministers were uncomfortable with the consolidation of utility power that the bid implied and had largely determined to make it a test case.The American intervention has made this a more difficult course of action. Plainly Mr Lang cannot refer the Texas Energy Partners’ bid to the MMC having already allowed a similar offer for Norweb to proceed unobstructed. Since they are old hands at the business of electricity supply, they presumably also understand what they are doing and how much value there is to extract from this business.
For North West Water however, entering a bidding war seems a much more contentious matter. Indians are recoiling from the shock of a fast-paced liberalisation which, after decades of protectionism, is buffeting the nation with Western consumerism and permissiveness. It is just about possible to see why the Americans should want to pay such a high price For them, Norweb is a bridgehead into Europe. The opportunity value is worth a considerable amount in itself.

A climate of xenophobia has been created by nationalist politicians in which multi-national companies are no longer regarded as the bearers of hi-tech goodies and cash but as invaders, the new Mogul hordes. With general elections six months away, this anger against all things foreign is likely to intensify.
These nationalists – an unlikely combination of leftists and Hindu revivalists – are trying to shut down the country’s first Kentucky Fried Chicken outlet, in Bangalore. The reason given is that its food is supposedly unhealthy, even though, a few streets away, hawkers sell cucumber slices doused in water scooped from open sewers.In a land where the cow is held sacred, McDonald’s has yet to begin grilling its Big Macs.This xenophobia has even brought out Indian defensiveness towards its trees. The pounds 50 consumer rebate to the Recs – payable on the first bills next year – will cost the Recs pounds 45.95 net after excluding VAT at 8 per cent. That would eat into Time Warner/Turner’s potential earnings from programme sales, institutional shareholders fear.TCI also stands to win what several New York analysts were last night calling “preferential” treatment on an option to sell TCI subsidiary Southern Satellite to Time Warner for as much as $360m, more than twice its estimated current value, within the next six years.These special arrangements were believed to be the key to winning the support of TCI chief exeuctive John Malone, a notoriously tough negotiator who controlled enough TBS shares to scupper the Time Warner/Turner merger.The concessions have attracted criticism from US West, the telephone company which jointly runs an entertainment operation with Time Warner. Its relatively high cost base, along with its modern, state of the art infrastructure, give it greater potential for efficiency gain than perhaps any of the other Recs. Norweb has long been considered one of the more attractive of the regional electricity companies.

The consequence is that certain types of cover will be much harder to obtain.”In the Netherlands, for example, it is already becoming more difficult to insure against floods.”Her comments follow a conference on global warming and its effects on the insurance market, held in London this week.Andrew Dlugolecki, chief manager of UK operations at General Accident, the Scottish insurer, said summer temperatures would be higher on average by 2 degrees Celsius within 50 years, with the chance of a 1976-style drought in any year rising to 1:3.Insurers need to undertake more research into weather patterns co-operating with government and business to improve risks and build up reserves against future claims, he added.But if, regardless of any preparation, a major earthquake were to strike a large urban centre such as Tokyo, financial losses could lead to 60,000 people losing their lives and cost US$2.5 trillion. Turnover rose from pounds 120m to pounds 166m in the six months to June and the interim dividend is maintained at 1p, although it is again uncovered by earnings per share which fell from 0.9p to 0.7p.The main profits in the half year came from the property division, where Higgs decided 18 months ago to put more effort. There was a small contribution from the pounds 75m warehouse and distribution joint venture entered into with Norwich Union at Swan Valley in Northampton earlier in the year.David Hill, deputy chairman, is to retire from the board at the end of October, the company said.. NIC CICUTTI

Global warming may not only cause rising sea levels and hot summers – it could also lead to rocketing insurance premiums and a refusal by insurers to provide cover for certain types of risk.
Homeowners living near to the sea or in areas more prone to flooding and storms, may be among those either denied cover or expected to pay far more for it.The profits of many insurers will also receive a battering as payouts exceed earnings, especially if a catastrophe were to strike suddenly, according to Alexander & Alexander, a firm of risk and insurance consultants.In the past 20 years, losses due to catastrophes have led to payouts of US$80bn (pounds 55bn), far more, after inflation, than in the previous two decades.Deborah Durkin, national project director at the company, said yesterday: “We have to examine each catastrophe individually, but there is no doubt that there has been a dramatic increase in the number of storms, earthquakes and similar happenings in the past 15 years.”The general consensus is that the market will not stand for it indefinitely. They will be squeezing the pips again.”Although the construction order book was maintained at around pounds 230m at the end of June, private work has increased its share from 60-80 per cent, while the public portion has halved to 20 per cent.Losses from construction recorded in the first half of the year are not expected to get worse in the second, Mr Theakston said, resulting in a “relatively small” construction deficit for the year.The gloomy tidings trimmed Higgs’ shares by 7p to 78p, well below last year’s 105p rights price, despite the announcement of half-year profits before tax almost maintained at pounds 593,000 against pounds 650,000 last time. “The Government is in the happy position of not having to spend in the conventional way and seeing its books balance in the run up to the election.”The current public expenditure round would probably to lead to further cuts, he forecast. “I don’t get a sense that the Government will be increasing spending on projects which will benefit the construction industry.