Thames Water has today launched a competitive tender process for investors to bid for the new company that will build and own the Thames Tideway Tunnel. Investors from around the world are being invited to take part in a competition to finance Britain’s biggest and deepest underground sewer tunnel. The 25km Thames Tideway Tunnel is urgently needed to prevent millions on tonnes of untreated sewage discharging into the tidal River Thames.
The project, which so far has been led by Thames Water, will become a company in its own right and will take on the funding for the infrastructure project. It is a unique opportunity for bidders to invest approximately £1bn equity in a new utility company.
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This competition for finance and the separate competition for construction, already under way, will ensure the customer bill impacts are as low as possible.
Mike Gerrard, managing director of the Thames Tideway Tunnel, said:
“This is a first for the UK, and we’ve already had a lot of interest from investors who want to be involved in this world-leading project with a vision of providing vital infrastructure for London.
“The Victorians built such an impressive sewer system it has lasted us for 150 years. But we have now outgrown London’s sewer capacity. The Thames Tideway Tunnel will not only solve the current problem of the river being treated as an open sewer, but it will make London’s sewer network fit for the 22nd century.”
David Leam, Head of Infrastructure Policy at London First, said he was confident the project would be attractive to foreign and domestic investors.
“Investors around the world are flocking to London for secure assets with predictable long term returns – this has already included our telecomms, energy and water infrastructure,” he said.
“They see the UK as a global safe haven and are attracted by the rule of law, stable regulatory framework, and strong financial markets.
“The Thames Tideway Tunnel is an all-too-rare investment opportunity in brand new infrastructure and seems certain to be the subject of strong global demand.”
The main works packages for the Thames Tideway Tunnel have been spilt into three geographical packages in east, west and central, with the central section offering the biggest tunnelling contract in the UK since Euro Tunnel.
The successful bidder for the IP will be announced in early 2015, at the same time the main works contracts are confirmed. The IP will then take on the contractual agreements with the construction companies with preliminary works beginning in 2016, and tunnelling starting in 2017.