Thames Water crisis threatens London super-sewer
Tideway Tunnel, which owns the project, has sounded the alarm ahead of a looming handover later this year – with bosses fearing Thames could withhold cash in its scramble to avoid nationalisation.
The sewer owner said it is closely monitoring Thames's plight and has sought assurances from the Government to ensure the project will not be threatened if the company collapses into special administration.
In its latest annual report, Tideway said: 'We continue to note Thames Water's evolving financial position and this has led to concern that their situation might change.
'There is a possible risk that Thames Water, given its current financial position, or a special administrator may choose not to pay an element of Tideway's revenue.
'This would not be consistent with Thames Water's licence and would be expected to lead to a breach and enforcement action.'
As part of its contingency plans, Tideway also considered the possibility of Thames failing to support the sewer's operations, warning that this 'could affect our ability to deliver our investment programme on time and on budget.
'If Thames Water does not comply with the revenue agreement, it could have a financial impact,' the company added.
Concerns over Thames Water's future come as the company struggles under the weight of a £17bn debt pile.
The company admitted last month that it could enter a taxpayer-backed special administration regime if a rescue deal led by more than 100 creditors fails to succeed.
Thames's financial crisis is in stark contrast to the completion of Tideway, which has been hailed as a rare infrastructure success story.
The 25km tunnel under the River Thames, which became fully operational earlier this year, represents the biggest improvement to London's sewage network in 150 years.
Buried 67m deep, the concrete pipe is designed to ease pollution pressures by redirecting sewage away from the river and into a treatment works in east London.
While Thames will not own Tideway, it is expected to be charged an annual fee for its use of the sewer. This will be paid to Bazalgette, a company bankrolled by a group of banks and pension funds.
A Tideway spokesman said: 'Tideway is a completely separate, independent company set up to deliver the Thames Tideway Tunnel project.
'This vital new infrastructure is now operational, and has already diverted away nearly eight million tonnes of sewage that would have historically spilled into the Thames.
'We remain confident that Tideway's revenues are well protected given water industry legislation and the licence obligations that apply to both Thames Water and Tideway. We continue to work effectively with Thames Water to deliver the benefits of the project.'
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