Dŵr Cymru Welsh Water has today confirmed that it has agreed a £230 million loan facility with the European Investment Bank.

The company said the loan, aided by Welsh Water having the highest credit rating in the UK’s utilities sector, will help it keep its costs down, which in turn will help keep customer bills lower.

Commenting on the loan, Jonathan Taylor, Vice President of the European Investment Bank, said:

“Continued investment in UK water infrastructure is essential to allow customers to access clean drinking water and sanitation that is amongst the best in the world. The new European Investment Bank engagement with Welsh Water announced today is the largest it has agreed with the company in more than two decades of doing successful business together. The impressive project seen in Llanelli demonstrates a clear commitment to protecting rivers across the Welsh Water area from pollution. The European Investment Bank is committed to supporting long-term capital investment in water, energy, education, healthcare and other crucial sectors, across the UK.”

Welsh Water, with its unique not-for-profit model in the utilities sector, provides water and wastewater services to over three million people across much of Wales, Herefordshire and Deeside.

The European Investment Bank loan will help finance the company’s extensive capital expenditure programme so that it can maintain and improve its services. This not only includes improving drinking water quality through the company’s £120 million investment programme to rebuild, refurbish or upgrade 12 water treatment works but also rolling out new and innovative schemes such as its surface water management approach called RainScape.

The £15 million RainScape investment in Llanelli and Gowerton involves retrofitting sustainable urban drainage systems to capture, divert or slow down the rate at which rainwater enters our sewer network. This reduces the risk of flooding or pollution from overloaded sewers following heavy rainfall and helps improve local eco-systems by creating greener and more sustainable places to live.

Welsh Water has benefited from loans of over £500 million from the European Investment Bank since the inception of Glas Cymru in 2001, helping it to finance over £1 billion of capital expenditure.

Chris Jones, Chief Executive of Dŵr Cymru Welsh Water, said:

“As a company without any shareholders, our sole focus is on providing the best possible service to our customers at the most affordable price. To deliver this, we must manage challenges such as accessing funding for our investment programmes at a competitive rate as well as the tight management of costs. We are therefore delighted to have secured this loan facility as it helps us deliver higher investment and lower bills for our customers.”

The European Investment Bank has been the largest lender supporting investment in UK water and sewerage infrastructure since before privatisation, and in the last five years, the European Investment Bank has provided more than £3.2 billion for investment by water companies across the UK.

Welsh Water’s loan is for 15 years, although the amount borrowed is paid back in equal instalments between years 5 and 10. The water company's £3 billion of debt is financed by bondholders (such as UK pension funds and life assurance companies) and banks seeking a long term low risk investment.

The financial savings resulting from its ownership model have generated financial reserves – or customer equity — of £1.6 billion and the firm's financial gearing has now fallen to 63% compared with 93% when Welsh Water was acquired by Glas Cymru in 2001.