Thames Water: Creditors set out rescue plan with £20.5bn investment
A consortium of Thames Water creditors have laid out plans for how a £20.5bn investment would “fix the foundations” of the UK’s biggest water supplier.
The group of 15 investors, known as the London & Valley Water consortium, are set to focus on improving the firm’s record on pollution and sewage leaks – with an aim to cut spills by at least 135 a year.
In these new plans, the group will spend £9.4bn on handling sewage issues – a 45 per cent increase on current levels.
The plans involve replacing 1,000km of water mains, with £2.7bn of this new cash injection directed into stopping further sewage spills.
Members of the group include Aberdeen, Elliott Management and BlackRock, who have previously called for a “regulatory reset” to avoid further hits to the supplier’s performance.
Mike McTighe, the Openreach chairman brought in to chair the consortium, said: “Over the next 10 years the investment we will channel into Thames Water’s network will make it one of the biggest infrastructure projects in the country.
“Our core focus will be on improving performance for customers, maintaining the highest standards of drinking water, reducing pollution and overcoming the many other challenges Thames Water faces.
The utilities veteran added: “This turnaround has the opportunity to transform essential services for 16 million customers, clean up our waterways and rebuild public trust.”
Thames Water time bomb
In May, water watchdog Ofwat slapped a historic £123m fine on Thames Water for repeated failures following what it described as its “biggest and most complex” investigations ever undertaken.
Of this penalty, £18.2m was down to rule breaches in relation to dividend payouts.
The regulator insisted at the time that Thames Water and its creditors would have to swallow these costs, as opposed to bill payers.
The embattled water supplier is locked in a race against time to avoid total collapse, amid rumours that Labour is already laying the groundwork for the firm to be put into a Special Administration Regime (SAR).
Earlier this week, Rachel Reeves intervened to push for a “market-based solution” before the group crashed into special administration and a government bail out.
The Chancellor insisted that any solution must result in a “successful turnaround” for the provider, amid reports that FTI Consulting is being lined up to advise on contingency plans if the company was wound up.