Thames Water: Reports warn of possible collapse over debt
According to reports, The Government is preparing backup measures for the urgent takeover of Thames Water due to mounting worries about its enormous debt of £14 billion.
There are reports suggesting that government officials are currently engaged in discussions regarding the potential temporary nationalization of the utility company, utilizing a special administration regime known as SAR.
The talks are believed to be happening among water overseer Ofwat, the Ministry for Environmental Affairs, Agriculture, and Countryside Living (Defra), and the Treasury. However, the proposals are still in their infancy and may not ultimately require implementation.
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This follows the resignation of Sarah Bentley, the CEO of Thames Water, who abruptly stepped down yesterday (June 27) due to growing concerns about the company's financial stability.
Thames Water is the largest water provider in the United Kingdom, catering to the water needs of approximately 15 million individuals residing in the regions of London and the South East.
Operated by a group of retirement funds and government investment funds, the corporation has faced scrutiny in recent times due to its inability to effectively address leaks and sewage pollution. Additionally, it has received criticism for distributing substantial rewards to its highest-ranking executives and shareholders.
The release of untreated sewage into rivers has become a troubling issue for the company across Oxfordshire, with frequent discharges occurring from sewage facilities in Oxford, Witney, Wallingford, and other locations.
Ms Bentley, who took up the position in 2020, announced in May that she would relinquish her bonus due to the adverse impact on the company's environmental and customer performance.
However, despite forgoing the additional compensation, the CEO was still able to increase her earnings twofold, collecting a whopping £1.5 million.
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In declaring her exit, she expressed: "The groundwork we have established for the transformation puts the company in a favorable position for upcoming accomplishments in enhancing customer service and environmental sustainability."
There was no immediate response from Ofwat, the Treasury, or Defra for comment.
During an interview with Sky News, Claire Coutinho, the minister responsible for children, refused to provide a direct response regarding the rumored strategies being put in place in anticipation of Thames Water's potential failure.
She expressed her belief that certain water companies, such as Thames Water, are facing challenging circumstances. However, she emphasizes that the Government's responsibility is to establish appropriate policies that safeguard consumers' interests and address vital issues for the country, such as the prevention of sewage leaks.
The owners of Thames Water injected a sum of £500 million into the company last year, marking the initial equity investment in the group since it was privatised.
They promised to contribute an additional £1 billion, depending on certain factors, and cautioned that "additional assistance from investors might be necessary".
Last December, Ofwat raised concerns about the financial stability of Thames Water, Yorkshire Water, SES Water, and Portsmouth Water.
