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Anglian Water set to outsource all operations

ANGLIAN WATER said this week that it wants to transfer 3,500 of its staff to contractors and consultants so it can outsource all of its operations.

At present, only 30% of Anglian's operations work - including running its £3.8bn assets, plus maintaining pipelines and laboratory testing - is put out to tender.

But Anglian's parent company AWG wants to outsource all of the water company's operations within five years because it will be cheaper than keeping the work in-house, said an AWG spokesman.

Anglian is looking for greater efficiencies in funding its investment plans. Its options are limited because water regulator Ofwat has clamped down on water price increases.

AWG also wants to refinance Anglian using borrowings to fund operations, as this is cheaper than issuing shares.

The success of this approach has been proved by the not for profit, Welsh water company Glas Cymru, said an AWG spokesman.

Ofwat must agree to the refinancing and outsourcing plan before it can go ahead.

If agreed, AWG's total £2.6bn debt will be moved into Anglian Water and another £800M raised via bonds to create an equity 'cushion' for to protect the company from unforeseen expenses such as drought or flooding.

Anglian Water's funds and management will then be ringfenced from AWG.

Water consultant WS Atkins managing director Colin Fenn said that his company would be interested in tendering for operations work if Ofwat could ensure that the competition is a 'level playing field' and that AWG's in-house contractor Morrison did not have preferred status.

Nina Lovelace INFOPLUS www. ofwat. org. uk

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