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Thames Water: Treading Water
Helen Rodriguez - Head of European Special Situations
Andrew Moulder - Head of Utilities
EXECUTIVE SUMMARY
- A few days after the government sponsored Independent Commission into the UK Water Sector with the intention to “Clean Up Our Rivers, Lakes and Seas”, the corporate clean-up of UK Water’s biggest transgressor, Thames, has begun. While the government commission has the luxury of time and is not due to report until June next year, the Thames process will run to an expedited deadline reflecting the spiralling liquidity situation (see Thames Water: Bridge Over Troubled Water). As of today, TWUL reports cash of c.£0.5 bn with £0.4 bn of reserves to be released per the plan to bridge liquidity until February 2025 ahead of implementation of the wider liquidity extension.
- We note that the government commission will be chaired by John Cunliffe, ex-deputy governor of the Bank of England (i.e. finance expertise not water sector background) so while the strapline is to identify systemic issues to fundamentally transform the water sector, the inference is clear that this is a crisis of funding as much as an environment. Having observed a notable degree of cronyism across the existing water sector, we see the value in an outsider coming in to take a look at existing practices and vested interests. The review has an open mandate and the Secretary of the Environment Steve Reed’s comments that “There are certainly very severe failures of regulation and governance that underpin the problems that we’re seeing in the water sector,” suggests that a more muscular version of Ofwat may emerge from all of this. Eventually.
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