Those of us choosing to holiday in Britain this year will be extremely cautious about taking a dip in the nearest beach, river or lake.
Many of our heavily indebted water firms neglect their responsibility for sewage-free wild swimming and nature.
Fines for spills are regarded by financiers, with scant regard for consumers, as another cost of doing business.
Nowhere is this more pronounced than at Thames Water, weighed down by £16.8billion of debt, where commercial sharpshooters are asking regulator Ofwat for an exemption from fines as a price for supporting an enterprise ruined by ruthless financial engineering.
Despite the mess, befuddled ministers and regulators, with the apparent support of Thames chairman Adrian Montague, believe there is a deal to be done.
The principal holders of the Thames debt – Elliott, Apollo, Silver Lake and Pimco, advised by investment bankers Jefferies – are remorseless.
Drowning: Commercial sharpshooters at Thames Water are asking Ofwat for an exemption from fines as a price for supporting an enterprise ruined by ruthless financial engineering
They have minimal interest in Thames’ 16million trapped customers but are determined to make a killing on the company’s debt.
The recent, thorough report on the failing water industry by former Bank of England deputy governor John Cunliffe, with its 88 recommendations, plots a way forward.
It seeks to end the regulatory fragmentation which has allowed owners and financiers to play havoc with the rules.
What it failed to do is provide a roadmap for Government decision-makers as they struggle with Thames.
The right thing for Labour is to put Thames into a special administration regime (SAR). It could then use legal powers to deploy an independent administrator to deliver a haircut to the debt and mitigate the high interest payments.
The way would then be clear for genuine, long-term infrastructure investors to come in and begin the mammoth task of restoring Thames’ credibility.
There is no shortage of candidates.
We are not talking about the ‘vampire kangaroo’ Macquarie, which despite its poor stewardship of Thames is being allowed to make a similar hash of Southern Water.
The original great hope for saving Thames was a rescue by private equity barons at KKR through an infrastructure fund. It retreated at the last moment, after finishing due diligence, when the group’s investment committee baulked at the potential reputational risk.
If the Government decided to put the enterprise into special administration, several bidders likely would appear. The owners of Northumbria Water, part of London-listed CKI, controlled by Hong Kong tycoon Li Ka-Shing, would be keen on doing a deal and be in for the long term.
There would be no demand for regulatory exemptions. CKI is already a big investor in Britain with interests in power and gas networks, and Britain’s biggest container port at Felixstowe in Suffolk.
Ofwat and regulators are thought to be broadly in favour of taking the SAR route. The blockages are at a higher level.
A Government which is already taking control of the railways and rescuing British Steel doesn’t want to be seen as prioritising public ownership and control, even if only temporarily, over market solutions.
The ultimate opponents are the Treasury. It is understood to be fearful of taking new obligations on to the books. This might happen should the SAR regime fail to produce a buyer and a quick sale.
There is a mistaken belief that blocking debt ghouls, such as Elliott, would be seen as unfriendly to overseas investment in Britain. It couldn’t be more wrong.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .