Bosses at Thames Water, the UK’s largest water supplier, say the corporate doesn’t have the cash to repay a £190m mortgage invoice due subsequent April.
Regulator Ofwat has reiterated considerations over the sum of money the agency’s dad or mum firm has borrowed, because the utility sits on a £14.7bn debt pile.
But senior executives on the firm blamed its monetary troubles on payments being saved at “very low” ranges by the regulator in an look earlier than the Environment, Food and Rural Affairs Committee of MPs on Tuesday.
The new chair of Thames Water, Sir Adrian Montague, instructed MPs: “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 added.
Alastair Cochran, joint interim chief government officer of Thames Water, instructed the committee it has £1.35bn of exterior debt, with £190m of this resulting from mature in April 2023.
When requested by MPs if the provider’s holding agency had the cash wanted, he replied: “Not currently, no.”
Instead, the lenders due the cash shall be requested to increase the reimbursement date, Mr Cochran mentioned.
If that extension is not granted spending cuts must be made to give you the funds, he added.
Existing shareholders – who embrace the UK’s largest pension scheme, the Universities Superannuation Scheme – would even be requested for extra money with new shareholders sought if no financing from present buyers is forthcoming, he added.
Whole water sector in dangerous form
Bosses of Ofwat additionally appeared earlier than the committee and mentioned Thames Water was an “outlier” resulting from its stage of borrowing.
But the issue was not remoted to the corporate, they admitted.
“We also agree that the finances of the sector are not in the shape that they ought to be,” Ofwat chief government David Black mentioned.
“We think that putting the public interest first needs to come much clearer in terms of the way that companies are acting.
“And so we expect they have not met public expectations. That’s very clear.”
Thames Water plans for customers to pay for improvements
Thames Water was revealed by Sky News to be on the brink of collapse in late June before securing more funding from shareholders in July.
New executives, appointed after the story broke, told the committee in July that they were moving away from the previous eight-year governance plan to a new three-year turnaround blueprint to improve the company’s finances.
But today the same committee was told that the plan wouldn’t work as there was too much to do.
“This turnaround will take a while and we is not going to fully full the job in three years”, Mr Cochran mentioned.
Read extra from Sky News:
Rental costs falling with UK ‘previous peak development’
Zara regrets ‘misunderstanding’ because it pulls advert
Real wage development at highest stage for 25 months
The utility has requested a 40% improve in payments in a enterprise proposal submitted to Ofwat, contingent on tackling leaks, buyer complaints, provide interruptions and air pollution.
While funding might initially be made by shareholders it is the shoppers who must pay for enhancements within the water system by way of their payments, Mr Cochran mentioned.
“Ultimately, if we want better service, then there is a price to be paid,” he added.
Source: information.sky.com”