Shareholders of Britain’s biggest water company are being accused of trying to blackmail the watchdog into agreeing bumper price hikes.
Investors at crisis-hit Thames Water yesterday refused to stump-up a promised £500million, raising the possibility of the company being rescued by the taxpayer. The sorry saga has triggered concerns about the financial health of other suppliers, given the sector is carrying £57billion of debt.
Thames, which owes £14.7bn, supplies one in four UK homes and has been slammed for its poor track record on pollution and service. The company’s nine shareholders – which include the Chinese government – had pledged some £3.25bn towards £18bn of investment in its creaking network over the next five years.
However, the plans also involved households being hit with a 40% surge in prices and a plea to reduce fines. Regulator Ofwat is due to give its initial response by May or June.
But shareholders claimed feedback did not look good and would leave Thames “uninvestible”. As a result, they refused to hand over the initial £500million. Sources say investors wanted Ofwat to approve even steeper bill rises before they inject more money. Other insiders deny this.
Gary Carter, from the GMB union, said: “Thames Water investors are essentially blackmailing customers and Ofwat. Holding bill payers to ransom for costs after years of under-investment is unacceptable.”
Thames was slammed for bumper boardroom pay and handed out a £37.5m dividend in October last year. New £850,000-a-year boss Chris Weston insisted it has enough funds to see it through to May. But he added: “If we were in a situation where we had no equity, then there is the prospect of a special administration.”
Ofwat said: “Today’s update from Thames Water means the company must now pursue all options to seek further equity for the business to turn around the performance of the company.” Ofwat and Thames insisted services would not be hit, even if a taxpayer rescue is needed.
Shadow Environment Secretary Steve Reed said: “The Gover-nment and regulators must do everything in their power to stabilise the company and ensure new investment comes through to fix the broken sewage system without taxpayers being left to foot the bill. Labour will strengthen the regulator’s powers and make financial stability a priority to prevent this happening again.”
Lib Dem Treasury spokeswoman Sarah Olney said: “Drastic action is needed to keep the taps running for customers. Executives have given billions to overseas investors whilst watching infrastructure crumble.”
In a joint statement, Thames’ shareholders said: “After more than a year of negotiations, Ofwat has not been prepared to provide regulatory support for a business plan which ultimately addresses the issues Thames Water faces. As a result, shareholders are not in a position to provide further funding to Thames Water.”
