News

Thames Tideway Tunnel construction to start next year as project gets its licence

Construction of London’s new £4.2bn ‘super sewer’ will start next year following the confirmation of independent investors to finance and deliver the scheme. Contractors will begin mobilisation in September.

Earlier today, Bazalgette Tunnel Limited, a new special-purpose company appointed to take the project forward, received its licence from Ofwat as a new regulated utilities business, separate from Thames Water.

At the same time, Thames Water announced a much lower than predicted cost of the project to customers. The company’s current average household bill for water and wastewater of around £370 per year is now expected to remain at that level, before inflation, until at least 2020. And the three preferred bidder contracting consortia had their contracts confirmed.

“It’s no exaggeration to say this is a truly momentous day for London and the River Thames. I want to thank everyone who has played a part in getting us this far,” said Thames Water CEO Martin Baggs.

This is a once in a generation opportunity and we are determined to raise the bar in every way, not least the way we treat local communities potentially most directly affected by construction works" - Andy Mitchell, CEO, 'Tideway'

“It’s a historic achievement and I look forward to supporting Bazalgette Tunnel Limited in ensuring the project is delivered safely, on time and to budget. The strong competition for both construction and financing has driven down costs for our more than five million bill payers.

“Our current annual bills already include £7 for the tunnel and this will eventually rise to a total of £20 to £25, before inflation. This is sharply down from the original maximum estimate of £70 to £80 set four years ago. The really good news is that cheaper finance and other efficiencies mean that this hugely important piece of national infrastructure can be built while keeping our bills at or around their current level, before inflation, for at least the next five years.” 

The news was welcomed by Environment Secretary Elizabeth Truss. “The Thames Tideway Tunnel will be a fantastic example of world leading British engineering at its best. It will also boost economic growth across the capital, generate more than 9,000 jobs and bring huge benefits to the natural environment by protecting the Thames from sewage,” she said.

“Today’s announcement brings us one step closer to finally modernising London’s ageing sewerage system. In the 21st century, the most dynamic city in the world should not have a river that is polluted by sewage every time there is heavy rainfall.”

The news means that Andy Mitchell, CEO at ‘Tideway’, the delivery organisation for the Thames Tideway Tunnel, now owned by Bazalgette Tunnel Limited, can get on and build the scheme. “Our task over the next seven years is quite simply to make sure London has a sewerage system capable of meeting the capital’s modern-day needs. Everyone in the team is excited and can’t wait to get started,” he said. 

“It’s not just about cleaning up the river, important though that is. Nor is it just about building a tunnel. It’s about making sure we transform the River Thames, making it central to the capital’s wider social and economic well-being. This is a once in a generation opportunity and we are determined to raise the bar in every way, not least the way we treat local communities potentially most directly affected by construction works.

“Through our commitment to remove excavated materials by barge, the opportunity to rejuvenate the river as a transport artery will be a particular focus for us.”

The Thames Tideway Tunnel will stem the flows from the 34 ‘combined sewer overflows’ (CSOs) identified by the Environment Agency as the most polluting. The £4.2 billion project will connect up with the Lee Tunnel. This has already been constructed by Thames Water to take wastewater otherwise destined for the river to Beckton sewage works, East London, from early in 2016.

Along with Thames Water’s recent expansion of the five sewage treatment works on the tidal Thames, the two tunnels will greatly reduce the 39 million tonnes of untreated sewage that currently overflow into the tidal River Thames via CSOs in a typical year.

“It’s no exaggeration to say this is a truly momentous day for London and the River Thames - Martin Baggs, CEO, Thames Water

Bazalgette Tunnel Limited is backed by pension funds and other long-term investors represented by Allianz, Amber Infrastructure Group, Dalmore Capital Limited and DIF. The investor group includes a significant proportion of UK pension funds through which over 1.7 million UK pensioners will have an indirect investment in Tideway. The Consortium’s backing fulfills a key component of the HM Treasury’s National Infrastructure Plan, designed to finance the development of UK infrastructure with the support of highly experienced private investors.

The consortium takes its name from Sir Joseph Bazalgette, the pioneering Victorian engineer, who more than 150 years ago transformed the capital, constructing the interceptor sewers to keep sewage out of the River Thames. Still in excellent condition, these remain the backbone of the capital’s sewerage network, but now lack the capacity to cope with the city’s rapidly growing population. 

With planning approvals for the 25-kilometre (15-mile) tunnel already secured, the newly-created company can now award the construction contracts for the project. The winning contractors for the three tunnel sections were selected through a separate and highly competitive tender process run by Thames Water:

  • West: Joint venture of BAM Nuttall Ltd, Morgan Sindall Plc and Balfour Beatty Group Limited
  • Central: Joint venture of Ferrovial Agroman UK Ltd and Laing O’Rourke Construction
  • East: Joint venture of Costain Ltd., Vinci Construction Grands Projets and Bachy Soletanche

The System Integration contract has been awarded to infrastructure support service provider, Amey, which will be responsible for providing process control, communication equipment and software systems for operation, maintenance and reporting across the Thames Tideway Tunnel system.

They will now mobilise their teams from next month to start the work, which is due to take seven years to complete.

Read: Historic day for connecting London and Londoners to the Thames

Comments

It should be noted that through Ofwat's announcement, the cost of this project, excluding inflation, has just risen to over £17Bn (5.5 million domestic bill payers x £25 x 125 years) at current prices and not the reported £4.2Bn. The reasons why the average bill increase is lower than Thames Water forecast are several. 1. The IP licence is for a period 125 years. This is untenable given that Integrated Water Resource Management that includes Sustainable Drainage Systems and rain water harvesting will result in reduced overflows that this project is intended to resolve. 2. If the Thames Water estimated bill increase of £70-80 had been enacted, the result would have been a reduction in their monopoly foul water service through installation of independent anoxic/anaerobic treatment plants throughout the urban environment where discharge to land or water is practical. At the estimated level, this would have show a 25% approximate return on investment for around a quarter of their current customers. 3. Ofwat and the UK government are in regulatory capture by Thames Water. Rather than adopt modern technologies an methodologies to capture, treat and reuse the cause of overflows (i.e. rain water) resulting in reduced costs, energy efficiencies and reduced CO2e impacts, they have opted to be led by vested interests. London will not become a more sustainable city by adopting such outdated and unaffordable technology represented by this detention tank. Environment Agency water quality data shows that the Upper Tideway already satisfies the 2000 Water Framework Directive requirements for "Good" ecological status. Once the Lee Tunnel is commissioned this year, the likelihood is that the Lower Tideway will also meet those requirements making this whole exercise redundant and huge waste of captured public money. No one has died as a result of poor Thames Tideway water quality. Many thousands are dying each year of poor air quality. We can only spend our money once and this project is not the priority. An independent review is urgently required to stop the extravagant waste of resources caused by this short-sighted government decision and sponsorship of this offshore monopoly utility's profits. We should also be considering the lead shown in Germany by breaking up and the re-municipalisation of Thames Water. Scotland and Wales have shown the way forward yet residents of England are being denied those benefits.