Source : NEW INDIAN EXPRESS NEWS
LONDON: Thames Water, the UK’s largest water supplier, has been ravaged since privatisation by soaring debts and chronic underinvestment, sinking into a deep financial crisis that has sparked bailout speculation.
So how did Thames Water, which serves about 15 million people across London and surrounding areas, end up in such a perilous financial state?
In a controversial move, the group this week proposed a massive hike in water bills that would worsen Britain’s cost-of-living crisis and prove unpopular ahead of a general election.
Privatisation and debt
Britain’s publicly-owned water and sewage industry was privatised in 1989 under the Conservative government of then-Prime Minister Margaret Thatcher. At that point, the sector had no debt.
Thames Water was floated on the London Stock Exchange before being acquired by German power giant RWE in 2001.
It was then bought by Kemble Water, a holding company led by Australian investment fund Macquarie, in 2006.
Today’s Thames Water, which comprises various holding companies, including Kemble, has debts of almost £15 billion ($18.7 billion), stoking fears it could face renationalisation. Macquarie no longer owns a stake in Kemble.
“Debt levels… ballooned during Macquarie’s time,” said Katie Meehan, co-director of King’s Water Centre at King’s College London.
Currently, it “operates under a ‘debt-driven’ model”, she told AFP.
Dividends
Critics accuse successive major shareholders of using debt to pay themselves generous dividends.
Macquarie divested its share of Thames Water parent Kemble Water in 2017. The utility’s current biggest shareholders are two pension funds: Britain’s Universities Superannuation Scheme and Canada’s Ontario Municipal Employees Retirement System.
“It might be tempting to label Macquarie as the ‘bad guy’ in this scenario, but in fact all of these utility transformations and its infrastructure-finance model were approved and regulated by the UK government,” noted Meehan.
SOURCE :- NEW INDIAN EXPRESS
