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Thames Tideway, the London super sewer, has been granted an extension to its operational deadline by six months due to Covid-19 and lockdowns delaying work on the project.
Regulator Ofwat modified Tideway’s licence to change the planned system acceptance date, the point at which the Tideway Tunnel is handed over to Thames Water to operate, from 28 February 2027 to 31 August 2027.
Progress was slowed during lockdown because social distancing was not possible in many sites that are smaller than other similar tunnelling schemes because of the central London location. Ofwat said: “Social distancing measures in such constrained worksites significantly impacted the ability of Tideway to operate at full capacity.”
Another challenge was staff being able to travel to work when public transport options were limited in the pandemic, despite Tideway making efforts to facilitate other transport plans.
Ofwat acknowledged the company managed the disruptions well and acted for the benefit of the project. It was therefore satisfied that Tideway provided sufficient evidence that the pandemic was the cause of the five month delay to the project. One additional month was granted to fix an administrative error from the original licence that came into effect a month later than it should have.
Not extending the licence would have exposed Tideway to penalties for non-completion by the original date and would have also see its weighted average cost of capital, which was set during competitive bidding, reduced by 1% from 1 February 2027.
In March, Ofwat changed the licence for the project to reflect the impact of Covid-19 pandemic on costs and the fall in interest rates since the project began. As a result, customers will absorb a greater proportion of the additional costs relating to work being suspended at the start of lockdown but will no longer be exposed to changes in interest rates.
Tideway, the company delivering the tunnel, is financed by Bazalgette Tunnel Limited, which in turn is owned by a consortium of investors. The project is being funded from Thames Water bills under the regulatory asset base model that is also being introduced for new nuclear projects.
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