Thames Water creditors seek pollution leniency in new turnaround plan

Thames Water may not fully comply with rules on pollution of England's waterways for up to 15 years, according to a new plan by creditors who are scrambling to avoid the utility being forced into government administration.

- Jasper Jolly

The creditors, who in effect own Thames Water, have said they will commit to paying fines for pollution, as well as writing off more of their loans and investing more in the company, in new proposals published yesterday.

But they also said "a full return to legal, regulatory and environmental compliance" under their plan would not be completed until at least the 2035-40 period, raising the prospect of sewage levels above legal limits in some places for at least a decade.

They will argue for further leniency on fines from the regulator, Ofwat, during that period, and say it will be impossible for the company to make upgrades across London and southeast England more quickly because of the scale of the work needed after years of neglect.

The group of financial institutions, under the new London & Valley Water holding company, has been locked in talks with Ofwat since May over acceptable terms for the restructuring of Britain's biggest water company.