Thames Tideway financial backers confirmed

27 August 2015

GREAT BRITAIN – Construction of the new ‘super sewer’ in London will begin next year. Confirmation of finance for the independent investors to finance and deliver the scheme was announced in August.

Bazalgette Tunnel Limited, a new special-purpose company appointed to take the GBP 4.2bn (USD 6.52bn) project forward, received its licence from regulator Ofwat as a new regulated utilities business, separate from Thames Water.

With planning approvals for the 25km, 7.2m-diameter tunnel already secured, the newly created company can now award the construction contracts for the project. The winning contractors for the three tunnel sections were selected through a separate tender by Thames Water.

- Western section: Joint venture of BAM Nuttall, Morgan Sindall and Balfour Beatty
- Central section: Joint venture of Ferrovial Agroman UK and Laing O'Rourke Construction
- Eastern section: Joint venture of Costain, Vinci Construction Grands Projets and Bachy Soletanche

Martin Baggs, CEO of Thames Water, said: "It's no exaggeration to say this is a truly momentous day for London and the River Thames. I want to thank everyone who has played a part in getting us this far.

"It's a historic achievement and I look forward to supporting Bazalgette Tunnel Limited in ensuring the project is delivered safely, on time and to budget. The strong competition for both construction and financing has driven down costs for our more than five million bill payers.

Environment Secretary Elizabeth Truss said: "The Thames Tideway Tunnel will be a fantastic example of world leading British engineering at its best. It will also boost economic growth across the capital, generate more than 9,000 jobs and bring huge benefits to the natural environment by protecting the Thames from sewage.

"Today's announcement brings us one step closer to finally modernising London's ageing sewerage system. In the 21st century, the most dynamic city in the world should not have a river that is polluted by sewage every time there is heavy rainfall."

Andy Mitchell, CEO at Tideway, the delivery organisation for the Thames Tideway Tunnel, now owned by Bazalgette Tunnel Limited, added: "Our task over the next seven years is quite simply to make sure London has a sewerage system capable of meeting the capital's modern-day needs. Everyone in the team is excited and can't wait to get started.

"Through our commitment to remove excavated materials by barge, the opportunity to rejuvenate the river as a transport artery will be a particular focus for us."

The Thames Tideway Tunnel will stem the flows from the 34 'combined sewer overflows' (CSOs) identified by the Environment Agency as the most polluting. The project will connect up with the Lee Tunnel. This has already been constructed by Thames Water to take wastewater otherwise destined for the river to Beckton sewage works, East London, from early in 2016.

Bazalgette Tunnel Limited is backed by pension funds and other long-term investors represented by Allianz, Amber Infrastructure Group, Dalmore Capital Limited and DIF. The investor group includes a significant proportion of UK pension funds through which over 1.7 million UK pensioners will have an indirect investment in Tideway. The Consortium's backing fulfills a key component of the HM Treasury's National Infrastructure Plan, designed to finance the development of UK infrastructure with the support of highly experienced private investors.

The consortium takes its name from Sir Joseph Bazalgette, the pioneering Victorian engineer, who more than 150 years ago transformed the capital, constructing the interceptor sewers to keep sewage out of the River Thames. Still in excellent condition, these remain the backbone of the capital's sewerage network, but now lack the capacity to cope with the city's rapidly growing population.

Work is expected to take seven years to complete.