Both Thames Water and Ofwat tell us that Thames can get itself out of the mess it is in. But a lot of what we have been told by the company has been wrong: they told us that their shareholders would inject more capital, and at the Select Committee in 2023 they didn’t know the quantum of their own debt, or its terms – staggering for a company in financial trouble.
Thames Water has £17bn of debt, and needs a major equity injection (thought to be between £3-5bn) or it will run out of cash at some point next year. It is politically untenable to allow the water and sewage system for a large part of the country to fail, so in the end the company knows that government has to bear the risk of stepping in. Given the ratings downgrade of Thames Water in July, this could be months earlier than the May 2025 date the company has publicly stated. If a guarantee is to be avoided, Thames, Ofwat and Defra need to change the way they are doing things.
Read the full piece published in The House on the 6th of August 2024 here.