Water firm could be nationalised as funding offer is pulled
THAMES Water bosses have admitted the firm could face the risk of emergency nationalisation as its funding crisis deepens after shareholders refused to give the troubled utility extra cash.
The group – the UK’s biggest water supplier with 16 million households across London and the SouthEast – revealed that its investors had pulled a £500m funding lifeline that was due to be paid at the end of this month.
Thames Water blamed Ofwat, claiming the regulator had made its business plan “uninvestible”.
It is understood that investors withdrew their funding plan that was agreed last summer after Ofwat refused to bow to the water giant’s demands for a 40 per cent bill hike for customers, an easing of capital spending requirements, as well as leniency on penalties for failing to meet targets.
The debt-laden firm’s chief executive, Chris Weston, admitted that if no alternative funding could be found by the end of next year, then it could face the prospect of a special administration – which would likely see the taxpayer pick up the bill.
Thames Water stressed that it had £2.4bn of cash available to it, which should see it meet funding needs for the next 15 months.
Mr Weston said there was a risk of nationalisation if funding was not secured after this, but added “we are a long way from that point at the moment”.
Ofwat and Thames Water sought to reassure customers that services would not be affected by the funding woes.
Chancellor Jeremy Hunt said the Treasury would monitor Thames Water’s situation “very carefully”. Asked if the Government was ready to step in to support customers if necessary, the Chancellor added: “Our understanding is that the company is still solvent and today’s news should not have an impact on the services received by customers.
“Obviously, there are parts of the country where the service has not been up to scratch … overall we will continue to watch the situation very carefully.”
The Liberal Democrats said the
Government should step in and take control of Thames Water immediately through a special administration regime (SAR), ahead of nationalisation.
Labour called on the Government to “stabilise” Thames Water but stopped short of making a plea for it to be nationalised.
The GMB union accused Thames Water of “blackmailing” Ofwat and customers. Gary Carter, GMB national officer, said: “Holding billpayers to ransom for costs after years of underinvestment is completely unacceptable.”