Bazalgette Tunnel Ltd (BTL), the Infrastructure Provider set up to finance, build, maintain and operate the Thames Tideway Tunnel, has formally notified Ofwat that it is in breach of its Project Licence - largely due to reasons outside its control.
BTL, which trades as Tideway, has notified the water sector regulator that it would not be able to submit its audited Annual Performance Report (APR) and other submissions to Ofwat on 15 July 2023 as required by its licence because its current auditors KPMG are unable to carry out the required audit. Tideway’s Project Licence requires it to submit an APR and other submissions by 15 July every year, accompanied by an auditor’s report.
Ofwat said KPMG had informed Tideway that they “apparently do not have the resources” to meet the deadline.
In lieu of taking enforcement action against Tideway, Ofwat has accepted an undertaking from Tideway. In terms of the undertaking, Tideway will submit an unaudited version of its APR by the due date, and the full audited version of its APR before 22 September 2023.
Ofwat considers that accepting the undertaking is a proportionate response to the licence breach, noting that the reasons for the breach have largely been outside of Tideway’s control, it has taken steps to remedy the breach (including trying to secure replacement auditors) and that it has been proactive in drawing the breach to the regulator’s attention.
Last week Tideway separately released an update on progress and a revision to its cost estimate as construction work nears 90% completion. The company has updated its cost estimate to take account of the remaining work programme and the impacts of inflation to £4.5 billion, reflecting an increase of c.2% since its last report. The estimated impact on water bills remains within the original cost projection range set in 2015.
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