The government is reportedly drawing up contingency plans for the emergency nationalisation of Thames Water as concerns grow over its £14 billion debt.
Ministers are said to be in talks about the possibility of temporarily bringing the utility company, which provides the sewerage service for Watford and nearby areas, back into public hands under a so-called special administration regime (SAR).
The discussions are understood to be taking place between water regulator Ofwat, the Department for Environment, Food and Rural Affairs (Defra), and the Treasury, but the plans are at a very early stage and may not need to be put in place.
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It comes after Thames Water chief executive Sarah Bentley stepped down with immediate effect on Tuesday (June 27) amid mounting worries over the financial stability of the firm.
It is now reportedly racing to raise £1 billion from investors to shore up its finances, with AlixPartners said to be advising the firm on turnaround plans.
A government spokesman said: “This is a matter for the company and its shareholders.
“The sector as a whole is financially resilient. Ofwat continues to monitor the financial position of all the key water and wastewater companies.”
The UK’s biggest water supplier said today (June 28) that it needs “further equity funding” on top of the half a billion pounds it raised from shareholders in March.
It said in a statement to shareholders: “Thames Water received the expected £500 million of new funding from its shareholders in March 2023 and is continuing to work constructively with its shareholders in relation to the further equity funding expected to be required to support Thames Water’s turnaround and investment plans.
“Ofwat is being kept fully informed on progress of the company’s turnaround and engagement with shareholders.”
Thames Water’s owners last year invested £500 million in the firm – the first injection of equity into the group since privatisation.
They pledged a further £1 billion, subject to conditions, and warned that “further shareholder support may be required”.
Last December, Ofwat issued a warning over the financial resilience of Thames Water, as well as Yorkshire Water, SES Water, and Portsmouth Water.
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