Can struggling Thames Water avoid collapse?

Thames Water, the company responsible for supplying clean water and removing waste for a quarter of the UK population, is currently facing a significant financial crisis. Originally debt-free when it was privatized in 1989, the company has since accumulated a staggering £15.4bn in debt.

A substantial portion of this debt was incurred during the ownership of Macquarie, an Australian infrastructure bank, which took over Thames Water and added over £10bn in debt before selling the company in 2017. While Macquarie claimed to have invested billions in upgrading Thames’s water and sewage infrastructure, critics argue that the company also extracted billions in loans and dividends, contributing to the company’s current financial woes.

Following the sale to Kemble, the current owner of Thames Water, the company now finds itself in dire financial straits. Kemble, backed by major pension and sovereign wealth funds, defaulted on debt payments, rendering the company effectively insolvent. This situation has raised concerns about Kemble’s ability to fulfill its promise of injecting more than £3bn in new capital into Thames Water.

In response to regulatory rejection of plans to raise customer bills by 40% above inflation, Thames Water has submitted a new proposal to Ofwat, the regulator. This new plan includes increased spending on environmental measures, aiming to address concerns and secure necessary funding for the company’s operations.

Despite the financial challenges facing Thames Water, the company reassures customers that water supplies will continue as normal. With enough funding to sustain operations until next May, the company acknowledges the need for a fresh cash injection in the future to ensure the continued delivery of essential services to its customers.

Back To Top