Thames Water, the UK’s largest water firm, is facing financial challenges due to its massive £18 billion debt burden as the water regulator, Ofwat, has told the firm it must secure additional funding independently, rather than relying on a taxpayer bailout.
The company hopes to reach an agreement with Ofwat and the government to avoid collapse.
Reports suggest that Thames Water’s shareholders are willing to inject £3.25 billion into the business, contingent upon reaching a regulatory agreement with Ofwat. The company is seeking permission to increase customer bills by 40% by 2030 and leniency on regulatory fines and dividend payments.
Thames Water received a £500 million cash injection from its shareholders last year, but it still faces financial difficulties, including a looming £190 million loan repayment due in April. The government has expressed a reluctance to see Thames Water collapse and has indicated readiness to intervene if necessary.
Thames Water has been criticised for sewage discharges and leaks, with the company losing significant amounts of water daily due to leaks from its pipes. Despite industry-wide criticism, water providers are anticipating above-inflation increases in household bills in April.
Thames Water’s financial performance has deteriorated, with profits falling by 54% in the first six months of 2023, accompanied by a rise in customer complaints. The company’s chairman, Sir Adrian Montague, recently resigned from his position at Thames Water’s parent company, Kemble Water, although he remains chair of Thames Water. Sir Adrian has argued for keeping the company under private ownership as the best solution to its problems.
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Thames Water told by regulator to find extra cash itself