Despite its natural monopoly and the luck of being passed into private ownership debt free, Thames Water now carries a debt at 80% of its value, approaching the regulatory limit.
The vast majority of that debt was added under the ownership of Macquarie, which took Thames on with £1bn debt, extracted dividends throughout its ownership, paid little regard to maintaining the waste water systems, and left Thames with failing infrastructure and £10bn debt and – all of which was allowed within regulations.
“The water companies seem to have spent more time and effort on financial engineering than actual engineering of our waste water systems,” Islam quips, painting a picture of a sector in desperate need of regulation.
Will the sector, particularly Thames, face increased regulation and meet the publics’ expectations in the short term? The Environment Act will link dividends to environmental impact, but there’s a big question mark over the government’s appetite to push for great change or to shift the services back into public ownership.
