https://newstanbulmedia.com/2023/07/08/hepatitis-c-medication-access/UK Water Industry Crisis ;Britain’s Water Industry Crisis: Sewage Spills, Leaks, and Crushing Debts
Financial Turmoil and Dire State of the Water Industry
UK Water Industry Crisis :Financial trouble at the company that supplies more than a fifth of the UK population with water has raised alarm about the dire state of an industry that delivers a resource people can’t live without.
Multiple Crises Plague the UK Water Sector
The problems are most acute at Thames Water, London’s utility, but the wider industry across England and Wales is struggling to deliver a reliable service under the weight of huge debts built up since it was sold to private investors over 30 years ago.
The Consequences of Financial Engineering
The UK water sector is “clearly in a state of multiple crises,” said Dieter Helm, a professor of economic policy at the University of Oxford.
“Sewage spills into rivers and coastal waters are routine, leakage is enormous, service is poor, and bills are high — and could go even higher starting in 2025 as mountains of debt make it hard for companies to fix those problems,” Helm told CNN.
Persistent Issues Despite Some Improvements
Although their track record on leakage and sewage has improved since privatization, according to the water regulator, Ofwat, companies in England and Wales leaked 51 liters of water per person per day between April 2020 and March 2021 — enough to fill more than 1,200 Olympic-size swimming pools every day.
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Financial Concerns for Water Utilities
Ofwat said in December that it had “elevated” concerns about the finances of eight of the 17 water utilities it regulates. Together, they provide drinking water and wastewater services to more than 37 million people in England and Wales, or 62% of the population.
Troubles at Thames Water
Thames Water, the company supplying water to millions of Londoners, is in deep trouble. The industry’s long-running problems have been thrust into the spotlight by a looming cash crunch at Thames Water, which serves 15 million people in London and the southeast of Engl The Need for Additional Funding
Thames Water said it would need to raise more cash from investors to support its turnaround plan. Days later, the firm was fined £3.3 million ($4.2 million) by a British court after pleading guilty to polluting a river in 2017.
The Challenges of Raising Funds
Thames Water has been trying to raise an additional £1 billion ($1.3 billion) from shareholders for more than a year. But investors had “become more concerned about the successful turnaround of the company,” according to Ofwat’s CEO, David Black.
The Broader Funding Concerns
Ofwat chairman Iain Coucher suggested the company could need even more cash. “There’s ongoing conversations about the remaining £1 billion, as to whether that is sufficient,” he said.
Implications for the Water Sector
Thames Water’s need for funds may be most acute, given its £14 billion ($17.5 billion) debt pile and persistently poor performance, but it is not alone in needing to tap investors.
“I understand more companies will announce that they’ve successfully raised equity in the near future,” Black said, noting Yorkshire Water had recently secured £500 million ($638.6 million) from investors.
The Need for Change
Water companies in England and Wales were privatized under Margaret Thatcher’s Conservative government in 1989. However, according to David Hall, a visiting professor at the University of Greenwich, “Money has been taken out, not put in.”
Hall estimates that water companies in England and Wales have collectively paid dividends worth £75 billion ($95.6 billion), when adjusted for inflation, since privatization. The same companies have also accumulated more than £60 billion ($76.5 billion) in debt since privatization, while raising little new money from shareholders, according to Ofwat.
The Rising Financial Pressure
The sector is now under growing financial pressure as interest rates soar and more money from customer bills is diverted toward servicing debt. Against that backdrop, water companies must invest another £56 billion ($71.4 billion) by 2050 to upgrade infrastructure and tackle sewage spills.
Government Intervention and Ownership
The UK government has held emergency talks over the future of Thames Water, which counts the Ontario Municipal Employees Retirement System as its biggest shareholder. S&P Global Ratings placed the company’s debt on negative ratings watch last week, which means it is at risk of a downgrade.
If Thames Water fails to raise new funds, it may be forced into a special administration regime, which is a form of insolvency that ensures services to customers are maintained while the government tries to find a buyer for the business.
Calls for Public Ownership
Experts argue that the ownership structure of the water industry must change, and there should be considerations for public ownership, similar to what was done with the rail network. David Hall suggests that the UK government should find a way to bring the water companies back into public ownership, as no other country in the world has sold the entire system to private companies.
As the water industry in Britain faces mounting challenges, urgent measures and potential changes in ownership structures are necessary to address the crises of sewage spills, leaks, and crushing debts.
