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The British water policeman on Thursday dampened the expectations of the United Kingdom’s largest distributor, Thames Water, whose catastrophic financial situation raises fears of a rescue by the State. The price increases will in fact be much more modest than hoped.
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December 19, 2024 – 10:29
(Keystone-ATS) The water regulator (Ofwat) has authorized an increase in average bills of 35% by 2030, to 588 pounds (667 francs), very far from the 59% increase demanded by the company to invest massively and modernize its old infrastructure.
In addition, Ofwat fined him 18 million pounds (20.4 million francs) on Thursday for having paid “unjustified dividends” despite poor performance.
“This is a clear warning to the entire sector: we will take action against companies that push money out when performance does not deserve it,” warned the regulator’s director general David Black in a statement. .
The price increase granted to Thames Water is in line with the average increase announced on Thursday for all water and sanitation companies in the country (+36%) which, Ofwat hopes, will allow an overall investment of 104 billion pounds (118 billion francs) in the country by 2030 “to accelerate” the cleaning of the sea and rivers.
British water companies, privatized since 1989, have been under fire for several years for dumping significant quantities of wastewater into rivers and seas, due to underinvestment in a water supply system. sewers which date largely from the Victorian era.
mountain of debt
Thames Water, contacted by AFP, did not immediately react Thursday morning. But the company judged in August that the requested price increases were not excessive and would only “compensate for years of low bills”.
Ofwat’s decision is subject to appeal.
Crumbling under a mountain of debt – almost 16 billion pounds accumulated since its privatization – the London area water company warned on Tuesday that due to lack of financing, it would run out of cash by next March.
At the same time, she hopes to have an additional debt of 3 billion pounds approved by the courts at the beginning of February, which would give her a little breathing space… but would make her debt a little heavier.
Such a solution would only be temporary in any case. Judge William Trower, in charge of the case, described it as “bridging financing pending a more substantial restructuring” during a hearing in London on Tuesday.
The company, now owned by a consortium of shareholders, primarily a Canadian and a British pension fund, hopes to be the subject of takeover offers in the coming weeks.
The investment fund Covalis Capital, for example, has already put on the table an indicative offer of around 1 billion pounds, in partnership with the French water giant Suez in an advisory role.
But potential investors were waiting for Ofwat’s decision on Thursday, decisive for the financing of the company in the coming years, before making up their minds.
Good value for money
Ofwat believes it has found the right balance, with an increase in bills neither too high for consumers nor too low – which would be likely to discourage potential private investors – according to its boss David Black.
The stakes are high, because if Thames Water, a company with 16 million customers, cannot find the financing it needs, it will call on the State to help.
The result is a potentially ruinous public rescue, which would constitute a thorn in the side of the Labor government and would weigh down already tight public finances.
Successive shareholders of the company are regularly accused of having used debt to pay themselves generous dividends, to the detriment of necessary investments. Discontent was further fueled at the beginning of the month by the company’s decision to increase bonuses for its executives.
“Citizens are right to be angry,” Labor Environment Minister Steve Reed responded Thursday, assuring that the government will ensure that “money intended for investment can never be diverted to bonuses or payments to shareholders.
