Environment Secretary Emma Reynolds has written to Ofwat flagging up Government concerns about the proposed Thames Water rescue package put forward by the company’s creditors, according to a number of reports in the UK press this morning.
BBC News, Sky News, the FT and the Times newspaper, which has had sight of Emma Reynolds’ letter sent to the water sector regulator on Monday, are all reporting on the latest development in the long-running negotiations between the creditors, Ofwat and the government as the water company seeks to put its finances on a sustainable footing.
In March Thames Water CEO Chris Weston issued a detailed announcement via the London Stock Exchange in response to recent press speculation about the terms of the London & Valley Water (L&VW) consortium's proposal for the turnaround, transformation and recapitalisation of Thames Water.
The L&VW Proposal would see Thames Water obtaining £3.35 billion of new equity and up to £6.55 billion of new debt ( made up of £3.25 billion of day-1 debt and up to £3.30 billion of committed undrawn debt, providing the capital) required to deliver a proposed Performance Improvement and Turnaround Plan for the entirety of AMP8 (2025-2030).
Referring to the outcome delivery incentives regime, Chris Weston’s announcement also said that under the proposal Thames Water "would not be subject to the outcome delivery incentives regime during AMP8, but would have an ambitious set of minimum expectations and performance targets."
According to the Times, the formal objections raised by the Government minister in the letter increase the prospect of nationalisation for Thames. The newspaper cites Emma Reynolds as saying that the proposed rescue package would place an “undue burden” on customers.
“Reynolds is understood to be concerned that the creditors’ offer for Thames Water is “weak”, not least after “15 years of mismanagement and failure”, the Times says.
On Friday 5 June Thames Water issued its Eleventh Consent Requests to secure further funding – two days after the company announced that its Tenth Consent Request had been approved, allowing it to access £413.49 million in further funding.
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