Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.

Hunt says Thames Water must ‘sort out’ its own issues

Unlock the Editor’s Digest for free

Thames Water must sort out its own financial problems, chancellor Jeremy Hunt has said, as he warned that the government would never insure investors against poor decisions.

Hunt said on Wednesday he would not tell a private company how to structure its balance sheet, adding that it would be “completely wrong” if customers at Britain’s biggest water group had to pick up the tab for bad decisions made by its managers or owners. 

Thames Water, which provides water services to 15mn people in southern England, is facing the prospect of a messy debt restructuring or even a temporary renationalisation amid public anger over sewage pollution and mistrust of England’s privatised water system.

Hunt was asked about Thames Water by reporters during a visit to Washington for the spring meetings of the IMF and World Bank.

He said the company needed “to sort out their own issues”, adding: “What we’re never going to do for people who invest in the UK is say that the state is going to insure you against bad decisions made by management or shareholders. That’s what markets are about.”

Hunt declined to say if Thames Water could head into a special administration regime, saying the Treasury “prepare for all possible outcomes in situations like this”. 

“What I want to protect in terms of the national interest is more investment, to ensure a more resilient water supply and clean rivers and fair treatment for bill payers,” he added.

Thames Water has been mired in a protracted stand-off with industry regulator Ofwat, and investor resistance to the watchdog’s demands precipitated a default by the group’s parent company this month.

Thames Water has an £18.3bn debt pile, and its shareholders include Chinese and Abu Dhabi sovereign wealth funds, and Canadian and UK pension funds.

The shareholders last month signalled their readiness to take an estimated £5bn loss on their investment as they ruled out injecting new equity into the group.

The company needs billions of pounds of new funding to maintain its operations and overhaul ageing infrastructure.

Thames Water has been pressing Ofwat for permission to embark on large increases in customers’ bills, a loosening of rules around dividend payments, and greater leniency on any fines for service failures.

Despite the problems at Thames Water, Hunt defended the UK’s as a destination for foreign investment, describing the country as “one of the most attractive places on the planet in terms of infrastructure investment”. 

He added there were lessons to be learnt from the travails of public sector monopolies such as water companies.

“We need to make sure that companies are regulated in a way that makes sure that what happens to their balance sheet doesn’t do damage to public services on which we all depend,” Hunt said.

Read the full article here

Leave a Reply

Your email address will not be published. Required fields are marked *