The taxpayers and the tank workers ‘pension plans would both suffer if the largest water company in the United Kingdom was temporarily nationalized, the water regulator and the Thames’ pensions trustee had warned.
Ofwat said that placing the Thames under the control of the government in the event that the company responsible for debt has collapsed could end up costing taxpayers of the billions of pounds.
Some current and old employees could also see future reduced pension rights, according to documents seen by the BBC.
The future of Wames Water is at stake, because the Court of Appeal examines whether an emergency loan of 3 billion pounds sterling in the giant of public services in difficulty can move forward.
The Thames and the majority of its lenders supported a plan that would see the company, which has a bunch of debt of 20 billion pounds sterling, would borrow an additional 3 billion pounds to maintain it long enough to finish a restructuring.
The supplier serves approximately a quarter of the population of the United Kingdom, mainly through London and in certain parts of southern England, and employs 8,000 people. He should miss in cash entirely by mid-April.
The rescue loan was approved following a crucial battle of the High Court last month, but a smaller group of lenders feared that they will lose the most and the liberal democratic deputy Charlie Maynard, who argued that the stack of more debts was not in the public interest, launched an appeal.
The Court of Appeal learned the arguments as to whether the loan should be granted, with a decision expected at the beginning of next week.
The documents observed by the BBC revealed that Ofwat rejected Maynard’s complaints that the Thames Adding to his heap of debt would mean higher invoices and also that a collapse of the administration would have a negligible cost for taxpayers.
In a letter to the court, the water regulator insisted that the Thames would be prohibited to recover any additional payment of interest from customer invoices.
He said he had not seen “no support evidence” of a figure advanced by Maynard that the administration would cost the government as little as 66 million pounds sterling.
The regulator did not comment on the estimate of Thames according to which it would cost taxpayers up to 4 billion pounds sterling.
Environment Secretary Steve Reed previously said that government intervention in the Water Thames “would cost billions and take years.”
In addition, the administrators of some 12,000 members of the Thames Water Retirement Regime expressed their concern about what “can be impacted significantly and prejudicially” if the company enters the administration.
If the Thames was going to collapse, these members would probably be transferred to the Lifeboat Pension Protection Fund, which offers future advantages lower than those promised by the original regime.
Thames hopes that the additional 3 billion pounds will be borrowed will give it enough time to start solving the many problems it has.
The company has been faced with strong criticism of its performance in recent years following a series of landfills and wastewater leaks.
Since the disastrous state of the company’s finances appeared for the first time about 18 months ago, the government was pending to put the Thames in a special administration.
But regardless of what happens to the company in the future, the water supply and the waste services to households will normally continue.
The first priority of the company, if the loan is approved, would be to reduce its huge heap of debt, forcing lenders to accept a delivery in what owed them.
The second would be to call on a OFWAT decision that it can only increase invoices by 35% above inflation over the next five years. The Thames argued that it had to increase by 53% during the period.
His third decision, which is linked to the two above, would be to attract new investors to pump money in a company that has attracted audience and regulatory fines.
While the government, the regulator and the pension administrators wish to avoid collapse, many believe that the water in the Thames must be extinguished from its misery – rather than going from a financial and operational crisis to another.
What the office and pensions underline is that it is likely to cost both taxpayers and workers.
