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DOWN THE PLUGHOLE? THAMES WATER IN TALKS OVER CASH INJECTION AS GOVERNMENT AND REGULATORS DRAW UP CONTINGENCY PLANS
NICHOLAS EARL FEARS over the future of Thames Water escalated yesterday, with the government drawing up contingency plans for the troubled utilities giant’s potential nationalisation as the supplier scrambled to secure funds amid escalating financial difficulties. The UK’s largest water company, which serves 15m customers and is owned by consortium Kemble Finance, has been locked in talks with its shareholders in a bid to raise £1bn. Those shareholders include Abu Dhabi and Chinese sovereign wealth funds and a host of pension funds. In a statement yesterday, Thames
Water revealed it received £500m of new funding from shareholders in March earlier this year, but warned it still needs more money to support its turnaround plans for fixing sewage leaks and creaking pipeline infrastructure. However, it played down talk of an imminent collapse – confirming it has £4.4bn of liquidity left over. This follows the abrupt departure of its former chief executive Sarah Bentley on Tuesday as it tackles a hefty £14bn debt pile and nearrecord sewage spills. If the supplier collapses, Thames Water could end up de-facto nationalised – propped up by taxpayer funds – in the same way Bulb Energy was following its fall
from grace two years ago during the domestic supplier crisis. Bonds linked to the company slid heavily yesterday. Kemi Badenoch, secretary of state for business and trade, told Sky News that “we [the government] need to make sure that Thames Water as an entity survives” and criticised Ofwat’s performance, suggesting it had prioritised driving down bills over infrastructure – which risked driving up costs for customers over the long term. The government confirmed it has been preparing a “range of scenarios” for its regulated industries including the water industry, but said the sector remains “resilient”.
Central bankers queue up to warn the fight against inflation is far from over JACK BARNETT ANDREW BAILEY and the cream of the global central banking crop yesterday warned they may need to keep heaping pressure on the global economy before they can declare victory over high inflation. Speaking at the European Central
Bank’s (ECB) annual monetary policy conference in Sintra, Portugal, the chiefs of the Bank of England, Federal Reserve and ECB signalled that their respective campaigns to ease price pressures still have legs to run. Bank governor Andrew Bailey said the drag on the UK economy from
high inflation would be a “worse outcome” than the hit from higher borrowing costs. He added that stronger-thanexpected wage growth and price rises meant he and the rest of the ninestrong Monetary Policy Committee (MPC) “had to make really quite a strong move” last Thursday.
MPC officials voted 7-2 in favour for a 50 basis point increase to the UK’s official interest rate, taking it up to a near 15-year high of five per cent. ECB president Christine Lagarde said she and the rest of the governing council are “very likely [to] hike again” at the eurozone central bank’s
next meeting in July. And Jerome Powell, head of the Federal Reserve, the world’s most influential central bank, said policy “may not be restrictive enough and it has not been restrictive for long enough”. £ CONTINUED ON P3
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