Ofwat's plan to lower household water bills in England and Wales will not hinder the build of a new super-sewer under London, according to Thames Water.
The company, which would oversee the creation of the £4.2bn drainage system extending from west to east London, had previously asked the UK's water regulator to increase household water charges by three per cent between 2015 and 2020. It said this would help it fund the project, which is officially called the Thames Tideway Tunnel.
But Ofwat rejected the request, and it announced this morning it intends to do quite the opposite – it has demanded that all UK water companies reduce household water bills by an average of five per cent over the next five years.
This might cast doubt on Thames Water's ability to continue with the project, but a spokesman for the UK's biggest water company confirmed to City A.M. that “work on the Thames Tideway Tunnel continues as normal”.
It said this was because construction of the tunnel will be financed and delivered by an independent infrastructure provider.
The purpose of the sewer, which is one of the UK's biggest infrastructure projects, is to clean up the water in the Thames. It would involve replacing the capital's current Victorian sewerage system with a newer and larger version that meets European environmental and health standards.
According to Thames Water, London’s sewerage system is no longer fit for purpose and spills millions of tonnes of sewage into the tidal section of the river every year.
The government gave the final go-ahead for the project in September when it accepted the Planning Inspectorate’s verdict that the tunnel should be built, but most of the funding will be obtained from shareholders via an ongoing auction overseen by UBS.
At least four consortiums have successfully made it through the pre-qualification step, and earlier this year it was reported that the richest man in Hong Kong and the rulers of Abu Dhabi were among those bidding.