Thames Water rescue deal faces government objections
Concerns over customer impact on proposed £10 billion rescue plan
Last updated 4 hours ago
Thames Water is reportedly facing temporary nationalisation after Environment Secretary Emma Reynolds raised doubts over a £10 billion rescue package for the company.
Reynolds is believed to have written to water regulator Ofwat on Monday, cautioning against the current offer from creditors, which she claims would impose an "undue burden" on the company's 16 million customers.
Government reservations emerged as Ofwat was reportedly considering the proposal from London & Valley Water, involving a £10 billion cash injection into Thames Water in return for waived new fines over sewage leaks for four years.
With debts nearing £20 billion, Thames Water - the UK's largest water supplier - is desperate for a bailout to avoid temporary nationalisation. The company has been hit with substantial fines due to environmental violations in recent years.
Creditor support is seen as the last viable option to prevent Thames Water from entering the Government's special administration regime, following the collapse of a prior rescue agreement with US private equity firm KKR in May last year.
According to The Times, Reynolds's concerns focused on potential downsides for Thames Water's customers under the creditors' deal, describing the proposal as "weak." The Government has reiterated preference for a "market solution" instead of nationalisation.
Requests for comments have been made to both Ofwat and the Department for Environment, Food and Rural Affairs.
A Thames Water spokesperson said: “We remain of the view that a market-led solution is the best way to secure the long-term stability needed to continue improving performance and advancing our turnaround plan, for the benefit of customers, the environment and our stakeholders.
“We are delivering our biggest infrastructure upgrade in 150 years, and our priorities remain on providing safe, resilient services for customers, supporting our colleagues and working closely with suppliers, government and regulators.”
Reynolds's letter arrives amidst a challenging week for Prime Minister Sir Keir Starmer, who is facing political pressure ahead of the Makerfield by-election on 16th June. Andy Burnham, Mayor of Greater Manchester and contender in the election, has expressed interest in renationalising the water industry as part of a reform strategy prioritising public interest.