Creditors of Thames Water have presented an 'ambitious' rescue plan for Britain's largest and most troubled water company, but it includes a request for leniency on environmental standards. The proposal, which seeks to avoid hefty fines by lowering regulatory targets, has been met with scepticism from customers and watchdogs.
The creditors argue that previous turnaround plans failed due to unrealistic expectations, and that the company's assets will take at least a decade to fix. They propose a £4bn debt write-off and a £3.15bn equity injection, but want fines to be based on achievable targets. This self-serving approach aims to prevent special administration, which would result in greater losses for creditors.
The government is reportedly wary of special administration, fearing backbench demands for permanent nationalisation. The Treasury prefers a market-led solution, making the creditors' plan the only viable option. However, critics argue that the plan lacks transparency, particularly regarding the extent of regulatory and environmental compromises being sought.
Customers are demanding clarity on the proposed leniency, as the creditors' plan only promises a 30% reduction in pollution by 2030, compared to the government's target of halving sewage pollution. The plan also includes vague commitments to a 'customer-centric culture' and a 'world-class board', with only one name mentioned so far.
The lack of detail has infuriated stakeholders, who see the negotiations as a closed-door affair with Ofwat, a regulator due to be abolished. Former Environment Secretary Steve Reed had previously ruled out leniency on sewage fines, raising questions about the current talks. Amid the murk, special administration is increasingly seen as a cleaner solution, offering a more substantial debt write-down and comprehensive reorganisation.
