The European Investment Bank has agreed to provide a £700M loan for the £4.2bn, 25km long, 7.2m i.d. Thames Tideway Tunnel, the biggest infrastructure project ever undertaken by the UK water industry.
Often dubbed the ‘super sewer’, the project is urgently needed to help tackle overflows of untreated sewage into the river through the centre of the British capital.
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The European Investment Bank is the world’s largest lender for water-related investment and the backing for the Thames Tideway Tunnel represents the largest-ever loan for water investment worldwide. The 35-year long-term loan from Europe’s long-term lending institution has been agreed with Tideway, the new regulated company set up to design, build, commission and maintain the 25km tunnel, which will directly control or intercept discharges from more than 30 combined sewer overflow points, stretching from Acton in the west to Stratford in the east.
“The new £700M loan for Tideway represents the European Investment Bank’s largest-ever water loan and the most significant support for UK infrastructure since Crossrail. This demonstrates the EIB’s strong commitment as the largest source of financing for long-term investment in UK water infrastructure since before privatisation and builds on more than £2bn of support for investment to improve London’s water and waste water infrastructure since 1989. We are pleased to support the construction of the Thames Tideway Tunnel, a world-class engineering scheme, delivering infrastructure vital to clean up the Thames,” said Jonathan Taylor, European Investment Bank Vice President.
“The EIB’s backing for Tideway is an important vote of confidence in us as a company, as we move into the construction phase. This loan covers a significant proportion of the financing we need to raise. The innovative, index-linked structure enables us to lock-in financing costs, whilst also matching our funding requirements and profiling debt service, in line with the expected growth in our asset base,” said Mark Corben, Tideway Chief Financial Officer.
“The Thames Tideway Tunnel is a really impressive project. It will improve the quality of the water in the Thames – benefitting fish and wildlife – and all the people along its banks. It will prevent millions of tonnes of sewage flowing into the water. It is also an excellent example of investment in the UK’s water sector, supported by financing from institutions such as the European Investment Bank: good value for customers, creating jobs and making the long term infrastructure decisions necessary to protect this great city and our natural environment in the century ahead,” said Rory Stewart MP, Environment Minister.
The European Investment Bank is the world’s largest international public bank and is 16% owned by the UK government. The European Investment Bank has provided more than £12.6bn for investment in water and waste water infrastructure across the UK including expanding reservoirs, reducing leaks and protecting against flooding.
Lending by the EIB in the UK last year totalled £5.6bn and supported long-term investment in 40 projects across the country. This represented the largest annual engagement since the start of EIB lending in the UK in 1973, which has supported nearly GBP 16 billion of overall investment.
In the last 10 years the European Investment Bank has provided nearly £8bn for direct investment in London, with additional investment from UK wide programmes.