The government estimates that supremely supreme the water sector could cost more than £220 billion.
A financial overhaul of Thames water by a group of US and UK creditors has been proposed, backed by broader debates on foreign ownership and public accountability in the water sector.
Major institutional investors, including BlackRock, Aberdeen and Elliott Management, are planning to restructure Thames Water’s £17 billion debt. This includes injecting £3 billion of new stock and £2 billion of additional funds to reduce hundreds of millions of pounds of existing debt.
“The plan is trying to break away from past patterns by providing customer priorities and improving environmental outcomes in the shortest possible time frame,” a creditor spokesman told the Epoch Times.
However, the group sought regulatory flexibility in return. They hope that Ofwat will take a “practical approach” by mitigating performance goals and compliance expectations.
According to Thames Water, “constructive discussions” are ongoing with many stakeholders, and its board will consider a turnaround plan in the coming weeks.
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In response to the creditor’s suggestion, OFWAT confirmed that it has conducted a thorough review.
“Our focus is assessing whether plans are realistic, deliverables and great benefits for our customers and the environment,” an Ofwat spokesperson told The Epoch Times.
Foreign ownership
Since privatization of water during the Thatcher era in 1989, all major regional suppliers in England and Wales have been privatized, promising to increase investment and efficiency.
However, in the past decade alone, the water company has awarded bonuses of over £112 million and incentives to shareholders. In response, the government enforced a “unfair bonus” ban on six water companies that do not meet environmental and customer service standards.
This applies to Thames Water, Yorkshire Water, Anglia Water, Wessex Water, United Utility, and Southern Water.
The tanker will pump excess sewage out of the Lightlands Lane Sewage Pump Station in Cookerham, Berkshire, England on January 10, 2024. Andrew Matthews/PA Wire
The largest shareholder is Ontario’s City Employee Retirement System (Canada), with 32% stake. Other investors include the UK university retirement pension scheme (20%), China Investment Corporation, Abu Dhabi Investment Bureau, and Hermes.
Southern Water is majority owned by Australian investment giant Macquarie, while Yorkshire Water is divided into investors in Singapore, Hong Kong, Germany and Australia.
Only a handful of water companies are open to the public, including Severn Trent, United Utilities and South West Water (via Pennon Group).
In contrast, water companies in Scotland, Wales and Northern Ireland are publicly or operated as nonprofits.
Nationalization debate
Amidst rising fines that have resulted in financial distress and record fines, political pressure has been growing for Thames water to be brought into public ownership.
Despite the growing political momentum of public ownership, the government has not confirmed its nationalization plan.
Water bills were unable to secure government support in March as Environment Minister Emma Hardy warned that it could cost more than £200 billion to reject the fisheries.
“It will take years to unlock the current ownership model. During that time, the sector’s problems will only get worse. The government hopes instead to tackle the situation as soon as possible by improving its privatized regulatory model,” she added.
Speaking about the official plan to nationalize the fisheries industry, the Environment, Food and Rural Environment Bureaus told the times it was “inappropriate” to comment on certain commercial cases.
PA Media contributed to this report.
