WIREDGOV

Dŵr Cymru Welsh Water has yesterday confirmed that it has agreed a £230 million loan facility with the European Investment Bank. The loan, aided by Welsh Water having the highest credit rating in the UK’s utilities sector, will help the company keep its costs down, which in turn will help keep customer bills lower as it implements its record £1.5 billion capital investment programme in the five years from April 2015 and commits to achieving a decade of below inflation price increases by 2020.

Welsh Water, with its unique not for profit model in the utilities sector, provides essential 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 sustainbale 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. This has helped finance over £1 billion of capital expenditure in improving water and wastewater services across its operating area and resulted in industry leading levels of customer service and the company achieving its best ever overall performance in 2013-14.

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.”

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 yesterday 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.”

On his visit to Stbeonhaeth Primary School which has benfited from a £500,000 investment from Welsh Water so that the company can better manage surface water in the local network, First Minister of Wales Carwyn Jones said: “We’re pleased that Welsh Water are working with local communities and delivering their innovative RainScape project. The significant improvements being made to urban drainage in Llanelli and Gowerton will make a real difference in reducing the risk of environmental damage and flooding during periods of heavy rainfall which I’m sure the local communities involved will welcome.”

Welsh Water’s new loan with the European Investment Bank follows recent engagement by Europe’s long-term lending institution in Wales that includes support for Swansea University’s new campus, upgrading Bangor University and improvements to energy infrastructure by Wales and West Utilities   and National Grid. 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.

Notes to Editor
 

• The interest rate on the EIB loan is commercially confidential. However, like Glas Cymru, the EIB is a not for profit organisation, and the interest rate is therefore competitive.
• The loan is for 15 years, although the amount borrowed is paid back in equal instalments between years 5 and 10.
• Welsh Water’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 our ownership model have generated financial reserves – or customer equity — of £1.6 billion and our financial gearing has now fallen to 63% compared with 93% when Welsh Water was acquired by Glas Cymru in 2001.

Dŵr Cymru Welsh Water 

• Dŵr Cymru Welsh Water is a water and sewerage company serving much of Wales, Herefordshire and parts of Deeside.
• Since 2001, it has been owned by Glas Cymru which was formed in April 2000 for the sole purpose of acquiring Welsh Water.
• Glas Cymru is a ‘company limited by guarantee’ - a business model is unique in the water industry.  It has no shareholders which means that all gains go to customers.
• Glas Cymru’s constitution strictly limits its purpose to that of financing water assets in Welsh Water’s area of appointment and managing Welsh Water’s business so that high quality water and sewerage services are delivered at least cost to the communities served by Welsh Water.
• As the sixth largest water and sewerage company in England and Wales, we provide water and sewerage services to over three million people.
• As part of our £30 billion network of assets, we operate and maintain 27,500km of water mains, more than 30,000km of sewers, 838 sewage treatment works and 66 impounding reservoirs.

Euoprean Investment Bank

• The EIB is a public bank and the world’s largest multilateral lender,  owned directly by the 28 EU member states, including the UK, and raises funding from global capital markets with a AAA rating.
• Since 2009 the EIB has provided more than GBP 24 billion to  support long-term investment in education, transport, energy and corporate projects across the UK.