LONDON – Thames Water’s senior creditors said they were working on a materially improved rescue deal, which could include a “golden share” for the government, to try to avoid the water company being taken into public ownership by Britain’s new prime minister.
Prime Minister Andy Burnham has said nationalisation is the best solution for Thames, for years held up as an example of the failure of Britain’s privatised water industry after sewage discharges into rivers sparked anger while debt ballooned.
The consortium of lenders, who hold £17 billion (S$29.5 billion) of the troubled utility’s debt, said it recognised the new government would like to see greater public control and involvement to strengthen water companies’ accountability.
The creditor group “has evaluated potential new local public control supervisory structures for Thames Water” that it will discuss with the new secretary of state “alongside additional commitments that could be implemented through a ‘Golden Share’”, it said in a statement on July 21.
A “golden share”, often owned by the government, gives the power to veto other shareholders over issues such as control.
Fight for survival
Thames has been fighting for survival after successive owners failed to invest adequately in its ageing infrastructure. It now has about £20 billion in debt, and has said it will run out of money by November.
A source close to the creditor group, which is called London & Valley Water, said on July 20 it could seek court action to recover its debt if the government takes control, potentially leaving Burnham’s administration facing a multi-billion-pound bill.
The creditors, however, said on July 21 they were eager to engage with new ministers and present a “revised proposal, which will deliver environmental compliance, cleaner rivers faster, and safeguard resilient supply and clean drinking water”.
They said they were confident they could address the issues raised by the Department for Environment, Food and Rural Affairs, which is now led by Angela Eagle, and the regulator Ofwat.
‘Record investment needed’
“Thames Water is a company of national importance, and we look forward to working with the new government to secure a long-term solution which delivers greater public control and the best outcome for customers,” a London & Valley Water spokesperson said.
“Under our plan, customers will have strong protections, regulators and Government will have enhanced oversight, and there will be greater controls to ensure Thames Water delivers the record investment needed to improve environmental and operational performance,” they added. REUTERS
