Thames Water faces a £40m fine after paying out a shareholder dividend despite its poor performance.
Water regulator Ofwat told Britain’s biggest water company last month that it would have to pay a penalty for breaching rules on dividend payments, according to Sky News.
The fine is another blow to the firm, which was forced to issue a ‘do not drink’ warning to hundreds of homes in Surrey on Friday after the discovery of hydrocarbons – a chemical compound which forms the basis for crude oil – in the water.
The embattled company has the right to appeal the fine before a final decision is made, but a final ruling is unlikely to take place before the general election on July 4.
Thames Water’s financial situation remains precarious while it struggles under a £15bn debt pile after years of heavy borrowing.
Thames Water faces a £40m fine after paying out a shareholder dividend despite its poor performance. Pictured: Woman distributes bottles water in Bramley, Surrey, after the water was polluted
Thames Water’s financial situation remains precarious while it struggles under a £15bn debt pile after years of heavy borrowing. Pictured: Thames Water staff test the water in Surrey
The fine is another blow to the firm, which was forced to issue a ‘do not drink’ warning to hundreds of homes in Surrey on Friday after the discovery of hydrocarbons – a chemical compound which forms the basis for crude oil – in the water. Pictured: The Asda village petrol station was closed for testing by Thames Water following the leak
The firm faces nationalisation by the government unless it can attract fresh capital.
Although it has enough money to last it until next year, it requires more than £3bn of equity by 2030 in order to keep operating and upgrade its infrastructure.
The fine being considered by Ofwat is notable because it is larger than the £37.5m payout made to shareholders last autumn, a Thames Water insider told Sky News.
Thames Water refused to comment when approached by MailOnline about the fine.
The company serves more than 15 million customers across London and south-east England.
Its shareholders include sovereign wealth funds and pension funds from Australia, Canada, China and Britain.
Earlier this week, the Financial Times reported that Ofwat was considering the introduction of a ‘recovery regime’ for financially troubled water companies to enable them to survive.
The company serves more than 15 million customers across London and south-east England (stock image)
Thames Water’s shareholders include sovereign wealth funds and pension funds from Australia, Canada, China and Britain (stock image)
The prospect of nationalisation will be among the most pressing domestic challenges facing the next government.
Last summer, there were reports that Whitehall officials had drawn up contingency plans for Thames Water’s collapse amid fears that it might not survive.
Amidst the financial difficulties of the company, it is also facing pressing matters when it comes to the delivery of clean water.
A total of 616 homes in Bramley, south of Guildford, were told on Friday their water is currently unsafe to drink following the discovery of hydrocarbons — a chemical compound which forms the basis for crude oil, natural gas and coal.
Samples collected on Thursday after a fuel leak from the village petrol station owned by Asda suggested ‘a possible deterioration in quality’ of drinking water ‘in some areas’.
Residents said they have been forced to travel to the village library to collect bottled water – including a mother who needs water to feed her disabled daughter.
A total of 616 homes in Bramley, (pictured) south of Guildford, have been told their water contains high levels of hydrocarbons, making it unsafe to drink
SURREY: Thames Water staff distribute bottles water in Bramley, Surrey where the petrol station is believed to be the source of water pollution in the village
SURREY: A local woman speaking to a Thames Water worker at a bottled water station in Bramley
SURREY: Residents getting water from a collection point in Bramley today after a fuel a leak
A map depicting the village of Bramley, south of Guildford, where the ‘do not drink’ notice has been issued by Thames Water
Sian Jones, 58, said: ‘My 20-year-old daughter is disabled and needs to be fed through a feeding tube.
‘That requires water, and so this is a pain.
‘The concern also is that this was caused by a leak from 2016 – so have we all been drinking water with low levels of petrol for a while?
‘We don’t know when this started for sure. So it’s definitely a worry in terms of the health impact.’
Thames Water has been regularly collecting and assessing water samples in Bramley following a historical fuel leak at the petrol station.
The warning threatens to be an election setback for Chancellor Jeremy Hunt, the MP for the constituency.
Residents in Bramley have been forced to travel to the village library to collect bottled water after a fuel leak at a nearby petrol station – including Sian Jones (pictured) who needs water to feed her disabled daughter
SURREY: Residents collecting water from a collecting point in the village
The Conservative MP on Wednesday had a call with the UKHSA, DEFRA, Thames Water and Asda who acquired the village petrol station.
Mr Hunt held a meeting with Thames Water CEO Chris Weston in April to discuss water outages, slow compensation payments and sewage spills. He is due to hold another public meeting in June.
A spokesperson for Thames Water said earlier: ‘Thames Water would like to reassure its customers that the village water supply has been safe to drink up to this point, as confirmed through its rigorous water testing, which has also been subject to regular review working alongside UKHSA throughout this period.’
Tess Fayers, Operations Director for the Thames Valley and Home Counties said earlier: ‘We are asking 616 Bramley properties not to drink the tap water following recent water sampling results.
‘The health and safety of our customers is our number one priority, and we would like to reassure residents that this is a precautionary measure. We are in the process of delivering letters and bottled water to the affected properties.