Emergency plans for possible Thames Water collapse drawn up after CEO quits and firm’s debt reaches £14bn
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The UK government is reportedly drawing up emergency contingency plans to temporarily bring Thames Water back into public hands as its debt pile reaches a mammoth £14 billion.
Ministers are said to be in talks about the possibility of emergency nationalisation of the water company under a so-called special administration regime (SAR).
Thames Water is the UK’s biggest water supplier providing services for 15 million people in London and the South East, and is reportedly racing to raise £1 billion from investors to shore up its finances.
Last year Thames Water’s owners invested £500 million in the firm but warned that “further shareholder support may be required”.
AlixPartners, a financial advisory and global consulting firm, is said to be advising Thames Water on turnaround plans.
Discussions are understood to be taking place between water regulator Ofwat, the Department for Environment, Food and Rural Affairs (Defra) and the Treasury, but the plans are at a very early stage and may not need to be put in place.
Ofwat warned last December over the financial resilience of Thames Water, as well as Yorkshire Water, SES Water and Portsmouth Water.
It comes after the water company announced its CEO, Sarah Bentley, has resigned with immediate effect following her promise last month that she would forgo her bonuses in the wake of mounting public outrage over the amount of sewage spills in UK rivers.
The company said that Ms Bentley would leave the board on Tuesday (27 June) but continue to support her interim replacement until a new full-time boss can be found.
In May she promised she would give up her bonus for the 2022-23 financial year but she still managed to double her pay, raking in £1.5 million.
At the time Gary Carter, a national officer at the GMB union, said that Ms Bentley’s plan to give up the bonus was “nothing more than a flimsy PR stunt” and the UK water industry is “in a complete mess”.
Ms Bentley said “it has been an honour to take on such a significant challenge” and “the foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance.”
Thames Water has come under pressure in recent years over its poor performance in tackling sewage leaks while handing out big pay packages to top bosses and shareholders.
Speaking to Sky News, children’s minister Claire Coutinho said water companies like Thames Water are “in difficult positions” but declined to comment directly on the reported plans to prepare for the firm’s possible collapse.