UK's biggest water supplier at risk of nationalisation as financial crisis worsens

Debt-ridden Thames Water said on Thursday that it was unable to secure a significant capital infusion from investors, attributing its inability to do so to industry rules that rendered its rescue plan “uninvestable”.

The largest water supplier in the United Kingdom announced in a statement that new equity worth £500 million ($630 million) will “not be provided by Thames Water’s shareholders” this month.

A plan that is “affordable for customers, deliverable and financeable for Thames Water, as well as investible for equity investors” is the subject of “ongoing” talks between the firm and industry regulator Ofwat, according to the statement.

The money made up the majority of a £750 million funding lifeline that investors had previously approved in July of last year in order to keep the company solvent.

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According to the British Press Association news agency, Thames Water had demanded concessions from Ofwat, including a 40% increase in water fees that would exacerbate the nation’s cost-of-living crisis. However, Ofwat had refused to budge.

It is reported that additional concessions would involve relaxation of capital spending mandates and relaxation of regulatory penalties.

Although it emphasized that customers would not be impacted, Ofwat stated on Thursday that Thames Water needed to look for alternative financial alternatives.

“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.

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“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.”

With about £15 billion in debt, Thames Water, which provides water to over 15 million homes and companies in London and southern England, is in danger of being nationalized.

In addition, the organization has come under heavy fire for failing to meet goals for lowering leaks and sewage discharges into waterways in spite of significant infrastructure investments.

Official figures released on Wednesday revealed that a record number of storm drains in England flooded with sewage last year, infuriating advocates for cleaner rivers and oceans.

The surge in pollution on UK beaches and waterways has angered environmentalists more and more, who have blamed privatized water firms for the problem.

(With agency inputs)