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Wednesday, 11 July, 2001, 10:42 GMT 11:42 UK
Final go-ahead for Glas Cymru
Welsh Water van
Cheaper bills are promised with the sale of Welsh Water
Glas Cymru has been given the final go-ahead it needed to run Welsh Water.

Ofwat - the official watchdog for the water industry - has said that Glas Cymru has met six conditions it imposed before a take-over would be allowed.

The regulator outlined the conditions in January when it said it was not opposed in principle to the change of ownership.


I am content that the six conditions have been satisfied

Ofwat director Philip Fletcher

Conditions included giving an assurance that customers would benefit from the deal.

In an open letter to Glas Cymru chairman Lord Burns, the Director General of Water Services Philip Fletcher said: "I am content that the six conditions have been satisfied.

"I will look to you and your board to deliver the required programme of outputs and improved service to Dwr Cymru's customers."

Glas Cymru met the six conditions by :

  • agreeing to the licence modifications proposed by Ofwat;
  • giving a public commitment to customer benefits;
  • making public its incentive schemes for executive management;
  • providing a public statement on its commitment to limiting activities to providing water and sewerage services;
  • giving a public commitment to appointing the members of Glas on the basis of best practice;
  • confirming that the rights proposed for bondholders do not impede the Director's duties under the Water Industry Act 1991.

    Profit-sharing

    Glas Cymru is promising to reduce water charges for Welsh Water customers, which are among the highest in the UK.

    It launched what was described as a "people's bid" back in November 2000, pledging to take over Welsh Water from its present owners - Western Power Distribution - and run it on a non-profit making basis.

    Instead of paying dividends to shareholders, cash surpluses would be shared with customers.

    The company has promised to reduce water charges for Welsh Water customers, which are among the highest in the UK.

    Controversial

    The board of Glas Cymru includes a number of current and former directors from the old debt-ridden Hyder group - a UK-listed water and electricity business which became financially overstretched and was bought out last year.

    The unusual financial structure of Glas Cymru has made this bid a controversial one.

    Instead of shareholders the company will be controlled by a group of 200 or so members - led by some some prominent names from the business world.

    They include Geraint Talfan Davies, former controller of BBC Wales.

    Hostile takeover

    The purchase price - nearly 2bn - would come from selling bonds in the City of London.

    Other water companies have been planning similar arrangements - which makes the ruling an important one for the future shape of the industry outside Wales too.

    Welsh Water, which supplies water and sewage services to nearly 3m people, was part of the Hyder group which fell victim to a hostile takeover by the US company Western.

    Welsh Assembly First Minister Rhodri Morgan welcomed the news of the go-ahead.

    "I particularly welcome the prospect of Welsh Water being owned once again by a company based, managed and controlled from Wales, based on a principle originated in Wales," he said.

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    See also:

    10 Nov 00 | Wales
    Welsh Water sell-off 'welcomed'
    03 Nov 00 | Wales
    The Hyder takeover countdown
    18 Aug 00 | Business
    Hyder faces fresh battle
    13 Aug 00 | Wales
    Hyder takeover bidding row
    15 Aug 00 | Business
    Takeover Panel under fire
    07 Jul 00 | Wales
    Snub leads to Hyder job fears
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