Skip to main content

Home  »  UK Business & Employment NewsUK Business News   »   Thames Water on the verge of collapse after revealing £10 billion black hole

Thames Water on the verge of collapse after revealing £10 billion black hole

Thames Water

Thames Water is facing a £10 billion black hole and is now in urgent talks with the UK regulator Ofwat.

The company, which serves 15 million customers, is now in urgent discussions with Ofwat, ministers and government departments over fears over its viability without a significant cash infusion.

The company's CEO Sarah Bentley also announced she was standing down earlier this week.

READ MORE: Thames Water CEO’s £1.5m pay package sparks controversy

Estimates suggest there is a financial deficit of around £10 billion.

Measures being discussed include temporarily nationalising the company, which would include a big investment of public money, as well as customer bills increasing.

The sale of the company is another option.

No indication has yet been given about how this could affect the company's 7,000 plus staff and contractors.

This would mean current shareholders, which include large Canadian and UK pension funds and investment vehicles for state money from China and Abu Dhabi.

Thames Water may need £10 billion more than it has already budgeted to bring infrastructure up to regulatory standards.

However, officials are still trying to determine the final cost, and this figure does not include the cost of interest payments on its £14bn debt.

A minister, who requested anonymity, said the government did not have a clear understanding of the costs involved or how much taxpayer support might be needed.

They said Thames Water and other water companies were in distress and needed urgent attention.

UK Business Minister Kemi Badenoch said the government was exploring ways to ensure the survival of Thames Water.

She told Sky News the government was looking at what it could do in order to make sure that “Thames Water as an entity” survived.

READ MORE: Union slams Yorkshire Water CEO’s bonus sacrifice as “hollow”

A spokesperson for Thames declined to comment on the size of the required cash injection but said the company maintained a strong liquidity position.

They said the company was working with shareholders to secure further equity funding to support Thames Water's turnaround and investment plans.

Need Career Advice? Get employment skills advice at all levels of your career

A spokesperson for Ofwat said it was monitoring the financial position of all key water and wastewater companies and had been in ongoing discussions with Thames Water about the need for a robust and credible plan to turn the business around and improve its performance for customers and the environment.

A government spokesperson said: “This is a matter for the company [Thames] and its shareholders. We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would. The sector as a whole is financially resilient. Ofwat continues to monitor the financial position of all the key water and wastewater companies.”

Follow us on YouTube, Twitter, LinkedIn, and Facebook.

Most Read News