Tideway, the company building London’s super sewer, has today paid tribute to teams working across the project during the pandemic, as it publishes its sixth annual report and accounts.

CEO Andy Mitchell commented:

“This year our teams have had to meet a whole new set of challenges, including the creation of Covid-safe working environments. This was a feat of meticulous planning and care and I pay tribute to our teams, including our contractors, for what they achieved. It was this care that meant we were able to hit the ground running when we re-started and hit many milestones through the year.

“We have much work ahead of us to get this vital project over the line but with our progress in the last 12 months, we are well on our way.”

Several key milestones achieved despite pandemic restrictions.

The company, which paused operations during the start of the national lockdown in spring 2020, is reporting the achievement of several key milestones delivered despite pandemic restrictions. The project was 63 per cent complete (against a target of 71 per cent) with 21km of tunnel constructed at the end of financial year 2020/21 - demonstrating marked progress towards completion of the underground phase of works. No major safety incidents or injuries were recorded during the year.

Chairman Sir Neville Simms said:

“I am proud of the way the whole company responded to the pandemic and I am very pleased that we were able to make significant progress, while working within the restrictions and guidelines that were essential to keep our workforce safe.

“As we progress towards the final stages of the excavation and tunnelling work on the project, we must now look to the next critical phase of connecting the asset before we reach our goal of a cleaner and healthier River Thames. We have proved what can be achieved during an exceptionally tough year, and I look forward to supporting the team as we move into the next stages.”

Two more tunnel sections were completed during the year, taking the total to three out of main five sections complete and the permanent structures that will form the new riverside public realm, started to take shape. Tideway is now into the final phase of tunnelling.

By the end of March 2022 construction will be over three-quarters complete, the near completion of primary tunnelling and half of secondary lining complete. Excavation of the main tunnel passed the halfway mark in February, and all the shafts have now been fully excavated.

Increase in cost estimate of £233 million takes total to £4.1 billion

In August 2020 the company published a revised estimate of its costs and overall schedule, taking account of the impact of the Covid-19 pandemic. Tideway announced a nine-month slippage in its schedule, moving the expected completion date to 2025 and also announced an increase in its cost estimate of £233 million, taking the total to £4.1 billion. The year-end position is in line with these estimates.

Commenting on carbon, the report says Tideway continued to work with the supply chain to reduce the embodied carbon of materials used in the construction of the Tunnel, which account for most of its carbon footprint.

Tideway’s Innovation Programme, “the Great Think”, encouraged and incentivised innovation through the supply-chain and has now generated a return on investment (ROI) based on cost savings for the project of 4.8:1, exceeding the original 3:1 target.

The company is forecasting that the total ROI of the programme will be in excess of 8:1 which will include a £3 million saving by using autonomous vehicles for 10-year tunnel inspections, avoiding the need to close the tunnel for manual inspections.

Tideway shares its innovations through the industry wide Infrastructure Innovation Partnership (i3P) and has had an integral role in developing a new i3P ‘membership model’ and online portal which was launched in February 2021. To date, Tideway has shared 180 innovations on the i3P site – the company said it will continue to share and track the benefits of the innovations via the portal.

Tideway’s supply chain spend to date since Licence Award has reached 1800 companies, with around 93% of the spend within the UK.

Financing activity

According to the report, Tideway has now reached a point of financial resilience, where sufficient liquidity has been secured to cover construction costs. The pandemic related revised cost estimate announced in August 2020 added c.£100 million to the long-term financing needs at current gearing targets.

“We continued to monitor the market to identify debt raising opportunities, but given our adequate level of liquidity, there was no requirement to borrow additional funds in the year,” the report.

Tideway has secured total committed debt funding of £2,843 million - of these committed debt facilities, £2,018 million has been settled and the funds have been received, and £825 million is still undrawn.

Uncertainty remains regarding both short and longer term financial impact of the pandemic

Commenting in the Chairman’s Introduction to the report, Sir Neville Sims said:

“As we move toward the commissioning phase of the project, our level of engagement with Thames Water is increasingly important. Staff from both Tideway and Thames Water who would ordinarily be co-located at Tideway’s head office have continued to work together through the pandemic, albeit remotely, but we have a plan for regular engagement going forward which I am confident will continue to strengthen relationships between the organisations and secure the successful result we both need to achieve.”

“The target of completion is now in sight and we need to ensure that staff and management resources are appropriate for the current and future phases of the project. …

In line with the ongoing evolution of the project, this will continue to be a focus for the year ahead, as we work to deliver the project efficiently, while maintaining knowledge and capability in critical roles….

“At the time of writing there remains uncertainty regarding both the short and the longer term financial impact of the pandemic and the effect of the extraordinary macroeconomic interventions, introduced by government, on revenue calculations and the regulatory response to these matters.

“We will continue to work closely with stakeholders to tackle the challenges that lie ahead and to deliver a project that both cleans up the River Thames and provides a successful model for future low-cost, long-term private capital investment in critical UK infrastructure.”

Tideway also achieved ambitious sustainability commitments during the year, including delivering on its target to provide 4,000 sustainable jobs. The Company’s approach was once again recognised externally, with Tideway named Company of the Year at the Global Good Awards and Responsible Business Champion for Outstanding Employment at the Business in the Community Responsible Business Awards.

Bazalgette Tunnel Ltd, trading under the name Tideway, began operating as an independent regulated water company in August 2015, when Ofwat awarded the Licence to design, build, commission, maintain and finance the Thames Tideway Tunnel. Thames Water is responsible for important elements of the project and will ultimately operate the system.

Since 2015 shareholders have invested £1.3 billion, with close to half of the total equity coming from UK investors, including many pension funds.

In 2019, as part of its sustainability commitments, Tideway was one of the first infrastructure projects to track its progress against the UN Sustainable Development Goals. An update of progress is included in the Annual Report.

Click here to download  Tideway annual report 2020-2021