Thames Water is lumbered with £15.2 billion of debt and must attract new investors by next June or risk running out of cash. The firm has been criticized over sewage pollution and leaky pipes but has pushed up profits. Still, its significant financial challenges could see it fall into government hands unless funds can be found.

It is in a tight corner, needing more money between now and June next year or it will run out. Currently, they have £1.8 billion, which can only last until May 2025. Thames Water has huge debt of £15.2 billion, growing £1.3 billion since last year. If that happens, the company would fall into the hands of the government, thus adding this debt to the public’s burden.

Of late, Thames Water has been at the receiving end of much criticism. There is anger over the frequent sewage spills, leaky pipes, and huge dividends paid out to shareholders. Despite all this, the financial results for the year to March 31 revealed that revenues jumped 10 per cent to £2.4 billion, driven by higher charges for water and wastewater services. Profits jumped 21 per cent on the back of better revenues and cost management.

There is a huge risk to the UK in bad Thames Water performance. The new Prime Minister Keir Starmer and Chancellor Rachel Reeves were told the company stands in a situation that is critical risk to the country. Chris Weston, the chief executive taking office since January, is quite sure that the company might find a way out from the situation through the financial markets without government support. Temporary nationalization would benefit none and not even the taxpayers, he stated.

He explained that it’s still early to tell whether the company would requirement government help. He himself is optimistic about the fact that Thames Water can do much to avoid such an outcome. The company has initiated talks with the new government and will continue the process soon.

Thames Water is understood to plan an appeal to potential investors for funding following the publication of a report by Ofwat, the water regulator, in December. It will give its verdict on the five-year business plans that English and Welsh water companies, including Thames Water, submitted. The group intends to tap a wide range of investors from autumn, in a process that could stretch into 2025.

Ofwat’s review will also show by how much Thames Water is allowed to increase its bills. The company has asked for a rise of 59% to fund its £19.7bn investment plan – part of which includes fixing leaky pipes and stopping sewage spills.

Things only got worse for the firm in March when shareholders retreated on a promised £500 million funding. This was a reaction after Ofwat’s action made the company less attractive to investors. The board in parent company, Kemble, even defaulted on its debt in April. The board approved a £150m dividend payout days before the bad news was announced.

There have also been more pollution incidents – 350 last year, 331 in 2022. This, according to Thames Water, is because it was wetter than normal, and their systems got overwhelmed.

The annual report of the company indicated that Chris Weston pocketed £437,000 for his first few months in the job. This came with a £195,000 bonus. His predecessor, Sarah Bentley, had taken home £436,429 during her notice period.

Union officials and green campaigners have demanded tighter controls and more investment to sort out the mish-mash of flaws in the company. Gary Carter from the GMB union said it was time for shareholders to stand up and support the company financially, reducing the number of leaks and sewage spills. Friends of the Earth’s Paul de Zylva said Ofwat has to ensure that Thames Water pays for the clean-ups that are needed without increasing the bills for customers. He also called for proper fines for pollution and an end to high pay and bonuses for failing water bosses.