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Ofwat pushes on with round four water contracts

CONTRACTS FOR some of the next raft of UK water infrastructure work, originally not due to start until 2005, have already gone out to tender, in an effort to start work early.

UK water industry regulator the Office of Water Services (Ofwat) is pushing water companies to start early on Asset Management Planning round four (AMP 4). The process will allow Ofwat to determine the programme of water infrastructure and environmental improvements that will be funded in 20052010 and the water bill price rises that will be allowed to fund them.

The move is triggered by concern that the first year of each planning period is typically spent planning work, leaving less than four years to actually carry it out.

During the previous review period, 2000-2005, water companies were criticised for falling behind on their work programmes and starting late on key maintenance work.

'There is particularly low investment in what is known as year 6, the first year of the AMP period, ' said Robert Weedon, economic regulation adviser at Water UK.

In a new scheme called the 'early start programme', water companies must identify investment needed in the first year of the programme - 2005, and submit this to Ofwat for approval.

This will be given at the end of 2003, before price limits are officially published in November 2004, allowing water companies to start early.

A result of the early start programme is that AMP 4 contracts are going out to tender early.

Welsh Water issued Calls for competition notices in May. Severn Trent Water has also advertised contracts for consultants and contractors to work in framework agreements for the five year period.

Many water companies are playing it safe and waiting for Ofwat approval at the end of the year before inviting tenders. But Welsh Water said that inviting early tenders was not risky and that it was simply engaging the marketplace early.

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