Southern Water considering shipping supplies from Norway to UK due to drought fears
One of the UK’s largest water companies is considering shipping supplies from Norway to the UK.
Southern Water said the idea was a “last-resort contingency measure” in case of extreme droughts in the early 2030s.
Up to 45 million litres could be brought to the UK per day under the proposals.
The Financial Times, which first reported the potential move, said the water, from melting glaciers by fjords in the Scandinavian country, would be transported by tankers.
It comes as fears grow over the future of water services in the UK following droughts in the summer of 2022 when some areas of the country came close to running out of supplies.
The Financial Times said Southern Water was in “early-stage” talks with Extreme Drought Resilience Service, a private UK company that supplies water by sea tanker.
The firm would pay for the measure out of customers’ bills, according to the report.
Southern Water, which covers Hampshire, Kent, East and West Sussex, and the Isle of Wight, currently gets its supplies from groundwater and rare chalk streams.
However, the Environment Agency (EA) has urged the firm to reduce its reliance on such sources amid concerns over the environmental impact and fears they could make the risk of droughts worse.
‘Costly and carbon-intensive’
Water firms have come under growing criticism in recent years over sewage spills and rising bills, with households facing an average increase of 21% over the next five years.
Companies have also been urged to improve their infrastructure to help supplies. Currently around a fifth of water running through pipes is lost to leaks, according to regulator Ofwat.
And a report by the EA earlier this year found that Southern Water, along with Anglian Water, Thames Water and Yorkshire Water, was responsible for more than 90% of serious pollution incidents.
Following criticism over sewage discharges, Southern Water’s chief executive Lawrence Gosden blamed “too much rain” in 2023 for the problem during an interview with ITV News.
Read more from Sky News:
Flood warnings for swathes of UK
‘Extremely dangerous’ hurricane hits Florida
Mohamed al Fayed and police ties ‘felt corrupt’
The company said it was facing a shortfall of 166 million litres per day in Hampshire alone during future droughts.
But the firm said it was already undertaking other measures to address the problem, including by building the UK’s first new reservoir in more than three decades in Havant Thicket.
However, Greenpeace UK’s chief scientist Dr Doug Parr criticised the Norway proposal and said the firm should focus more on addressing issues domestically.
“Tankering in huge quantities of water from Norway will inevitably be a costly and carbon-intensive alternative to that of doing a better job with the water resources that are available in a rainy country like the UK,” he said.
He added: “Despite the obvious failings of planning, water companies need to start thinking of potable fresh water as a precious and finite resource, and plan to start treating it as such.”
Please use Chrome browser for a more accessible video player
From 2022: How can we protect ourselves from water crisis?
Tim McMahon, Southern Water’s managing director for water, said: “We put less water into supply now than we did 30 years ago and measures like reducing leakage have enabled us to keep pace so far with population growth and climate change.
“As we work to take less water from our chalk streams and build new reservoirs like Havant Thicket in Hampshire, we need a range of options to help protect the environment while this infrastructure comes online.”
Mr McMahon added: “Importing water would be a last resort contingency measure that would only be used for a short period in the event of an extreme drought emergency in the early 2030s – something considerably worse than the drought of 1976.
“We’re committed to continuing to work with our regulators on developing the right solutions to meet the challenge of water scarcity, while protecting the environment.”
One of the world’s largest investment firms has waded into the fight over the future of Thames Water, the water utility which is racing to stay afloat.
Sky News has learnt that KKR is in talks with Thames Water and its advisers about participating in a £3bn share sale which forms part of a wider recapitalisation plan.
City sources said this weekend that KKR, which has more than $550bn of assets under management, was among a handful of parties which had accessed a data room for potential investors.
Rothschild, the investment bank, is running a process to raise around £3bn from the sale of an equity stake in Thames Water, which is grappling with a debt mountain of as much as £19bn.
Other investors which have expressed interest in acquiring newly issued shares in the water company include Carlyle and Castle Water, the latter of which is controlled by Graham Edwards, the Conservative Party treasurer.
Global Infrastructure Partners, which is owned by BlackRock, Brookfield and Isquared are also reported to have lodged an interest, although sources said that the latter two were unlikely to play any further role in the process.
The crisis at Thames Water is presenting Sir Keir Starmer’s administration with a challenge as the debt-laden company attempts to avert temporary nationalisation.
Insiders said that KKR was “a serious player” in the equity process being run by Thames Water, although its outcome hinges on a final determination by Ofwat, the industry regulator, which is due by January at the latest.
Thames Water – and other suppliers across Britain – wants to hike bills and is demanding leniency from Ofwat on fines for past transgressions.
One obstacle to KKR buying a big stake in Thames Water, which has more than 15m customers, may be its 25% holding in Northumbrian Water.
Money blog: Should you give money directly to a homeless person?
Under Ofwat’s mergers regime, the Competition and Markets Authority would need to review the deal, although there would not be an automatic prohibition.
The share sale process is being run in parallel to an attempt to raise up to £3bn in debt financing from hedge funds and other investors.
A battle has broken out between the holders of Thames Water’s class A bonds, which account for the bulk of its borrowings, and its riskier class B debt.
Both sets of bondholders have submitted proposals to the company, with the class A’s arguing that theirs is more certain and the class B’s arguing that theirs will save the company £380m or more in fees and interest over a 12-month period.
Thames Water has already endorsed the class A group’s offer, with an initial £1.5bn of funding to be delivered immediately.
The class A bondholders are now trying to secure backing for their proposal within the next fortnight.
Their group, which includes the American hedge funds Elliott Advisers and Silverpoint, would earn in the region of £650m during the first year of the financing.
One area of controversy is likely to be any incentive plan for Thames Water bosses, led by chief executive Chris Weston, as part of a deal to give the company a stay of execution.
Please use Chrome browser for a more accessible video player
September: Thames Water boss says he can ‘save’ company
Last month, the environment secretary, Steve Reed, established an independent review of the industry that will look at far-reaching reforms.
Keep up with all the latest news from the UK and around the world by following Sky News
It was unclear this weekend which of KKR’s funds was participating in the Thames Water equity-raise.
The firm owns John Laing, an infrastructure investor, which it took private in 2021.
It has also owned South Staffordshire, another water company, selling its 75% interest in 2018.
KKR declined to comment.
The business secretary will next week hold talks with dozens of private sector bosses as the government contends with a significant corporate backlash to Labour’s first fiscal event in nearly 15 years.
Sky News has learnt that executives have been invited to join a conference call on Monday with Jonathan Reynolds, in what will represent his first meaningful engagement with employers since Wednesday’s budget statement.
Rachel Reeves, the chancellor, unsettled financial markets with plans for billions of pounds in extra borrowing, and unnerved business leaders by saying she would raise an additional £25bn annually by hiking their national insurance contributions.
An increase in employer NICs had been trailed by officials in advance of the budget, but the lowering of the threshold to just £5,000 has triggered forecasts of a wave of redundancies and even insolvencies across labour-intensive industries.
Sectors such as retail and hospitality, which employ substantial numbers of part-time workers, have been particularly vocal in their condemnation of the move.
Keep up with all the latest news from the UK and around the world by following Sky News
On Friday, the Financial Times published comments made by the chief executive of Barclays in which he defended Ms Reeves.
“I think they’ve done an admirable job of balancing spending, borrowing and taxation in order to drive the fundamental objective of growth,” CS Venkatakrishnan said.
His was a rare voice among prominent business figures in backing the chancellor, however, with many questioning whether the government had a meaningful plan to grow the economy.
Mr Reynolds held a similar call with business leaders within days of general election victory, and over 100 bosses are understood to have been invited to Monday’s discussion.
A spokesman for the Department for Business and Trade declined to comment ahead of Monday’s call.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway