Thames Water warns it will run out of money by next May as it scrambles for funding

Thames Water has confirmed it has enough reserves to keep it afloat until next May but that it needs new investment.

The water company is creaking under a debt pile of more than £15 billion but said it has £1.8 billion of liquidity, enough to fund its operations for another 10 months.

However, despite the constraints, it paid two fresh dividends worth £158.3 million in March, and said it is unlikely to raise fresh funds before December.

Thames said it paid the dividends to help fund two of its holding companies, Kemble Eurobond and Thames Water Limited, which are in financial trouble.

The dividends come after water industry regulator Ofwat had already said it is "minded" to take action against Thames Water for a smaller £37.5 million dividend payment in October 2023.

Under new rules introduced last year, water companies with poor financial and environmental records are not allowed to pay dividends.

Thames Water paid a total of £196 million in dividends last year.

Liberal Democrat Treasury spokesperson Sarah Olney MP said: "This is a complete mess and it's time the regulator started blocking Thames Water's planned dividend payouts and eye-watering bill hikes.

"Years of inaction from Conservative Ministers has lead to these bill increases and firms getting away with endless sewage dumps and insulting bonuses."

The firm said it is still looking for fresh funding needed to maintain and update its infrastructure, after investors pulled the plug on £500 million of emergency cash earlier this year.

Thames Water said profit increased to £75.4 million for the year ending March 31, up on a £30 million loss the year before.

Revenue increased 11% to £2.5 billion.

Pollution incidents increased to 350, up on 331 last year, which it blamed on a rainier-than-expected year.

The number of "serious pollutions" decreased by 18%, Thames Water said.

It said it spent £2 billion on maintaining and updating its infrastructure last year.

The financial update will be followed on Thursday by a draft verdict from Ofwat on water companies' five-year spending plans and bill increases to 2030.

That will kick off six months of negotiations with Ofwat, ahead of its final decision in December.

The process of securing new cash is "not expected to conclude" until after Ofwat’s final decision.

Chief executive Chris Weston said Thames had taken "informal soundings which have shown there is interest in the market".

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