The government is contemplating radical plans that could involve denationalising Thames Water, potentially transferring the majority of its £15.6 billion debt to the public purse. This information has been uncovered by the media.
Whitehall is in advanced stages of drafting a plan, dubbed Project Timber, to convert Thames Water into a publicly owned entity. Under this blueprint, Britain's largest water company would operate at arm's length from the government. Some lenders to its core operating company could face losses of up to 40%.
This contingency planning underscores Whitehall's significant concerns over the company's condition, emblematic of privatisation failures in public utilities. Interestingly, when Thames Water was removed from public ownership in 1989, it had no debt.
The Department for Environment, Food and Rural Affairs (Defra) and the Treasury are spearheading the blueprint. Plans for a special administration of Thames Water hinge on Kemble being wiped out, with its lenders, owed approximately £3 billion, not compensated from public funds.
Additionally, bondholders for the operating company, within a regulatory ringfence, may witness reductions of up to 35%-40% in the value of their loans, as per figures supporting potential nationalisation, seen by the Guardian.
