UK’s biggest water supplier plunges into deeper financial crisis

LONDON: Debt-plagued Thames Water has failed to raise a major cash injection from shareholders, it revealed Thursday, blaming industry regulations that made its rescue plan “uninvestable”. Britain’s biggest water supplier said in a statement that £500 million ($630-million) of new equity would “not be provided by Thames Water’s shareholders” this month. The cash represented most of a £750-million funding lifeline agreed with investors in July to stay afloat.

The company on Thursday said it was in talks with industry regulator Ofwat over a plan that is “affordable for customers, deliverable and financeable for Thames Water, as well as investible for equity investors”.

Britain’s domestic Press Association news agency said Ofwat had refused to bow to Thames Water’s demands for concessions, which it said included a 40-percent jump in water bills that would worsen the country’s cost-of-living crisis.

Other concessions sought reportedly include an easing in capital spending requirements and leniency over regulatory penalties.

“Safeguards are in place to ensure that services to customers are protected regardless of issues faced by shareholders of Thames Water,” said an Ofwat spokesperson.

“Today’s update... means the company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers.”

Thames Water, which supplies more than 15 million homes and businesses in London and elsewhere in southern England, is saddled with debts of almost £15 billion that have placed it at risk of nationalisation.

“We prepare for a range of scenarios across our regulated industries — including water — as any responsible government would,” said a statement Thursday from the Conservative administration led by Prime Minister Rishi Sunak.

Steve Reed, environment spokesman for the main opposition Labour party, said “the government and regulators must do everything in their power to stabilise the company and ensure new investment comes through to fix the broken sewage system without taxpayers being left to foot the bill.”

Labour, widely tipped to win a UK general election this year according to several polls, “will strengthen the regulator’s powers and make financial stability a priority to prevent this situation from happening again” should it win power, Reed added in a statement.

Thames Water has faced fierce criticism over missing targets to reduce leaks and slash sewage discharges into rivers, despite major infrastructure investment.

Environmentalists have increasingly voiced outrage at the rise in pollution on the UK’s beaches and waterways, and have pointed the finger at privatised water companies.

Elsewhere on Thursday, researchers revealed that high levels of E.coli, a bacteria found in human waste, had been found in London’s River Thames. The river will Saturday host the Oxford and Cambridge Boat Race — an annual event featuring competing rowing crews from England’s two oldest universities.