Britain’s biggest water company has been forced back to the drawing board in its search for a new boss after the frontrunner for the job pulled out of the process.
Sky News has learnt that Basil Scarsella, who was being lined up as Thames Water’s next chief executive, has decided against taking the job.
Sources said on Friday that Thames had now resumed its hunt for a successor to Steve Robertson, who was ousted last May after a period of weak performance.
Mr Scarsella – who Sky News revealed in November was the leading contender to become Thames’s new chief – had been on the verge of being announced publicly as Mr Robertson’s replacement.
A source close to the company said he had withdrawn his name from the process “for entirely understandable personal reasons”.
The news that Thames is resuming its search for a chief executive comes six weeks after it was told by the industry regulator to cut customers’ average bills by more than 7% over the next five years.
Water companies have until the middle of February to decide whether to mount a formal challenge to Ofwat’s final price determinations, which were set out just four days after the general election.
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Industry analysts believe Thames is unlikely to appeal, having received a final settlement that was less draconian than feared.
The company has brought in specialist restructuring advisers amid concerns that Ofwat’s ruling could make it impossible to service its £12bn debt mountain.
Anglian Water and Yorkshire Water’s parent company are still said to be weighing potential challenges to be lodged with competition authorities.
The outlook for the entire water industry now looks brighter than it has done for much of the last two years, with the looming threat of nationalisation by a Labour government terrifying investors in the sector.
If Mr Scarsella had joined Thames, his appointment would have been welcomed by shareholders given his experience in the utilities sector.
Thames, which has a total of 15 million customers, is owned by a consortium of British and overseas pension funds and state-backed investors.
Its search for a new boss comes after a dismal period for an industry beset by a poor record on water leakage, repeated scandals relating to the treatment of sewage and rows over the payment of shareholder dividends.
Last June, Southern Water was handed a record £126m penalty by the regulator, Ofwat, over its handling of wastewater, intensifying pressure on the industry to clean up its act.
Thames Water was taken over by Macquarie, the Australian infrastructure investor, in 2006, in an £8bn deal.
Macquarie sold a number of stakes to third-party funds before offloading its remaining shareholding in 2017.
The company’s current investor base is led by Omers, the Canadian pension fund, which owns just under a third of the shares.
The Universities Superannuation Scheme (USS), which manages the retirement savings of British academics, is the second-biggest shareholder, with funds from Abu Dhabi, Australia, Canada, China and the Netherlands among Thames Water’s other investors.
Ian Marchant, the company’s interim executive chairman and a former boss of SSE, the power supplier, has been leading the search for Mr Robertson’s successor.
In a statement on Friday, a Thames Water spokesman said: “The board of Thames Water has been conducting a thorough search for a CEO.
“It would be inappropriate to comment on an ongoing process and we will make an announcement when a decision has been made.
“We have a committed and strong leadership team driving our plans forward, and our focus on delivering for customers and protecting the environment remains unchanged while the search continues.”
Thames is easily the UK’s largest water and wastewater services company with an annual turnover of £2bn.
It has three million residential customers, and 15 million customers in total when accounting for its waste services,
More than 6,000 people work for the company.
The company’s service area stretches from Gloucestershire and Wiltshire in the west, through London and the Thames Valley, to the western edges of Essex and Kent in the east.
In 2017, Thames Water was fined more than £20m for dumping raw sewage into the River Thames and its tributaries, with a second, smaller, penalty imposed the following year.
SOURCE : https://news.sky.com/story/thames-ceo-frontrunner-pulls-plug-on-talks-11922713