Foreign funds ‘holding customers to ransom’
Thames Water’s 15 million customers are being “held to ransom” by China’s sovereign wealth fund and the troubled utility’s other foreign and domestic shareholders, campaigners warned last night.
The nine major investors in Thames Water significantly upped the stakes in their stand-off with industry regulator Ofwat yesterday when they declared Britain’s biggest water company to be “uninvestable” and withheld an expected cash injection of £500m due this week.
The shareholders, who also include the sovereign wealth fund of Abu Dhabi alongside
UK, Canadian and Dutch pension funds, said the refusal of the regulator to give a green light to certain conditions – including a hike of at least 40 per cent in bills – meant they were unwilling to proceed with a plan to put a total of £750m into Thames Water this year as part of a £3bn scheme to put the utility on a secure footing.
Thames Water has insisted that it may still be able to persuade its existing shareholders – or unspecified new investors – to put in new money if Ofwat agreed to its investors’ demands for more favourable rules, thought to include requirements for more lenient regulatory fines and an ongoing ability to pay dividends.
City insiders told i that a combination of factors including the company’s huge debts and complex structure mean fresh corporate investment is currently unlikely, although other sovereign wealth funds – such as those of Saudi Arabia or Kuwait – could be persuaded to show an interest.
It was reported last night that the nine major shareholders are willing to write off as much as £5bn of their investment in the company.
The state-owned China Investment Company (CIC), which has global assets worth £1.1trn, including a stake in Heathrow airport and UK gas networks, holds an 8.7 per cent share of Thames Water while a subsidiary of the Abu Dhabi sovereign wealth fund holds 9.9 per cent.
Ashley Smith, founder of the campaign group Windrush Against Sewage Pollution, told i: “Bill payers are simply being held to ransom by Thames Water and its shareholders.
“The situation has been laid bare by the desperation of the company. This is not so much handing over the family silver, it’s like handing over your oxygen supply. It’s ludicrous how stupid we have been.”