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Thames Water has confirmed it paid two contemporary dividends value £158.3 million in March, because the closely indebted firm mentioned it’s unlikely to lift contemporary funds earlier than December.
The water firm, which is creaking below a debt pile of greater than £15 billion, mentioned it paid the dividends to assist fund two of its holding firms, Kemble Eurobond and Thames Water Restricted, that are in monetary bother.
Ofwat has already mentioned it’s “minded” to take motion in opposition to Thames Water for smaller £37.5 million dividend fee in October 2023.
Beneath new guidelines launched final 12 months, water firms with poor monetary and environmental information usually are not allowed to pay dividends.
Thames Water has confronted widespread criticism for ranges of sewage leaking into waterways. Occasions together with this 12 months’s Boat Race and Henley Royal Regatta confronted warnings over ranges of E.coli within the water.
It paid a complete of £196 million in dividends final 12 months.
The agency mentioned it’s nonetheless searching for contemporary funding wanted to take care of and replace its infrastructure, after buyers pulled the plug on £500 million of emergency money earlier this 12 months.
It mentioned it has £1.8 billion of liquidity, sufficient to fund its operations till the top of Might subsequent 12 months, however that it wants new funding.
Thames Water mentioned revenue elevated to £75.4 million for the 12 months ending March 31, up on a £30 million loss the 12 months earlier than.
Income elevated 11% to £2.5 billion.
Air pollution incidents elevated to 350, up on 331 final 12 months, which it blamed on a rainier-than-expected 12 months.
The variety of “severe pollutions” decreased by 18%, Thames Water mentioned.
It mentioned it spent £2 billion on sustaining and updating its infrastructure final 12 months.
The monetary replace will likely be adopted on Thursday by a draft verdict from Ofwat on water firms’ five-year spending plans and invoice will increase to 2030.
That can kick off six months of negotiations with Ofwat, forward of its ultimate choice in December.
The method of securing new money is “not anticipated to conclude” till after Ofwat’s ultimate choice.
Chief govt Chris Weston mentioned Thames had taken “casual soundings which have proven there may be curiosity out there”.
If it finally fails to draw contemporary funding, Thames Water’s fraying funds might current Sir Keir Starmer’s newly elected Labour authorities with a big industrial disaster.
A blueprint codenamed Venture Timber was being drawn up in Whitehall within the spring, based on stories, which might see the corporate successfully nationalised.
Beneath the plans, the corporate can be positioned in a type of particular administration within the situation that its mother or father firm fails.
Mr Weston added that it’s “not within the pursuits” of shoppers or buyers for the corporate to fall into authorities arms.
Communities minister Jim McMahon mentioned on Tuesday morning: “We recognise that, during the last 14 years, frankly, the water trade hasn’t been regulated anyplace close to as firmly because it ought to have been, and we haven’t seen the funding to take care of the sewage scandal.”
He mentioned there’s a want for reform and for regulation to be checked out, including: “The times of placing shareholder curiosity above the nationwide curiosity, frankly, can’t keep on and so we do want to have a look at that and Thames do want to have a look at their very own home and get it so as.”
Mr McMahon mentioned there may be “no programme of nationalisation for the water trade” when requested what the plan is that if the corporate collapses.
He did nonetheless say there may be “no provision in regulation for a water firm to cease offering water”, including: “We must be very clear there may be all the time a contingency in place.”
Thames Water, which has 16 million prospects in London and the Thames Valley area, put ahead plans in April that will see spending rise to £19.8 billion to replace its infrastructure and scale back sewage spills.
Nevertheless, that will additionally contain growing buyer payments by 44%, a determine which has prompted backlash from client teams.
In the meantime, the method of securing new money is “not anticipated to conclude” till after Ofwat’s ultimate choice on Thames’ marketing strategy in December.
Any improve in payments can be greeted with anger, after Thames Water and different water firms’ disastrous latest environmental information sparked a nationwide scandal over air pollution.
Thames mentioned air pollution incidents elevated to 350, up on 331 final 12 months, which it blamed on a rainier-than-expected 12 months.
The variety of “severe pollutions” decreased by 18%, Thames Water mentioned.
When questioned on the difficulty on Tuesday, Mr Weston mentioned: “You may not like the reply, however rain has a huge impact on spills.”
It comes amid stories that Sir Keir has been briefed that the poor state of Thames Water’s bodily infrastructure presents a “crucial threat” to the nation.
Fears in regards to the firm embrace its administration of websites that present ingesting water and sewage therapy for London and the Thames Valley, The Guardian newspaper reported.
Thames Water mentioned it spent £2 billion on sustaining and updating its infrastructure final 12 months.
The prime minister’s spokesperson advised reporters on Monday: “The federal government has mentioned in its manifesto that we are going to put failing water firms into particular measures and they’re going to haven’t any selection however to wash up their act.
“We talked about giving regulators the ability to dam fee of bonuses to executives who pollute our waterways and impose automated and extreme fines on them for wrongdoing.”
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