Thames Water Rescued from Nationalization with Emergency Loan Plan
London, England (AP) - Thames Water, the UK's largest water utility, has secured a lifeline with an emergency court-approved loan of £3 billion to prevent government takeover.
The funding, approved by Justice Thomas Leech, aims to avert a potential nationalization as the company faces insolvency next month. Thames Water serves 16 million customers in and around London.
"Rescuing Thames Water Group is in the public interest," said Leech, citing the potential risks of government intervention or an alternative plan from a small investor group.
The loan will prevent Thames Water from running out of cash, avoiding the possibility of government administration. Both the government and the company have assured customers that water supply will continue uninterrupted.
Thames Water's Chairman, Adrian Montague, hailed the decision as a "significant milestone" towards financial recovery. However, critics have blamed the company's poor financial health on excessive dividends and executive salaries while neglecting infrastructure investments.
Company executives argue that low water bills imposed by regulators have hindered needed improvements. The water industry has faced public outrage over sewage spills in rivers and coastal areas.
"This decision saddles customers with billions in debt while executives evade responsibility," said Charles Watson, Chairman of River Action.
Ofwat, the water regulator, has approved a 35% increase in consumer charges over five years. Thames Water had sought a 53% increase to finance projects and attract investors.
The company faces significant penalties for sewage discharges, including a £100 million fine in August.
Justice Leech rejected Plan B, an alternative credit proposal supported by a small investor group, in favor of Thames Water's plan backed by major creditors.
This emergency loan provides Thames Water with a chance to restructure and secure a permanent solution before potential government intervention.