- The utility giant is struggling under the weight of a £14.7bn debt burden
- Thames Water’s CEO and chairman appeared in front of MPs on Tuesday
Thames Water bosses have blamed the company’s financial woes on ‘very low’ consumer bills as the group warned it lacked the funds to repay a significant loan due next year.
The under-fire utility giant is struggling under the weight of a £14.7billion debt pile, leaving it at threat of insolvency and a possible government bailout.
Sir Adrian Montague, its chairman, told MPs on Tuesday that regulatory limits on customer price hikes were partially responsible for the firm’s financial predicament.
Financial issues: Thames Water is struggling under the weight of a £14.7billion debt pile
Appearing in front of the Environment, Food and Rural Affairs select committee, Montague said: ‘Some of the problems that we’re now encountering were because the bills were kept deliberately very low over the last period.
‘It seems a case of ‘we would say that, wouldn’t we?’ but there is truth there.’
He also apologised for describing a £515million loan Thames Water received from shareholders in March as ‘equity’ at a previous committee session.
Meanwhile, Thames Water’s joint interim chief executive, Alastair Cochran, said the firm did not have the money to pay a £190million loan due for maturity in April 2024.
He said: ‘Our proposition to the lenders is going to be, ‘Please will you extend the maturity because everything about Thames Water will be much clearer from a financial perspective after we have received Ofwat’s determination.’
Thames Water has gone from being debt-free at the time of its privatisation in 1989 to one of the most indebted English and Welsh water companies.
Much of its debts were accumulated during the ownership of financial services firm Macquarie Group, when they more than tripled from £3.4billion to £10.8billion.
Critics have accused Macquarie, dubbed the ‘Vampire Kangaroo’ for its history of asset-stripping, of underinvesting in investee business while taking out billions in loans and dividends.
Since Macquarie sold its final stake in Thames Water six years ago, the firm’s debts have continued to rise, partly due to interest rates pushing up borrowing costs.
Thames Water has faced backlash alongside the rest of the water industry for its poor record combating leaks and sewage spills.
It was responsible for over a third of ‘serious pollution incidents’ in 2022, according to the UK Environment Agency.
Last week, the group revealed the number of pollution incidents increased by 18 per cent in the six months ending September, alongside financial results showing pre-tax profits fell by over half to £246.4 million in the same period.
Thames Water provides drinking water and wastewater services to about 15 million customers across London and South East England, making it England’s biggest water company.