The government has intensified its preparations for the potential temporary nationalization of Thames Water, according to the environment secretary.

During a Parliament session on Thursday, Steve Reed announced that the government is “prepared for all scenarios,” which may include taking control of the troubled water utility “if necessary.”

Earlier this month, Thames Water encountered a significant setback in its efforts to secure its future, following the withdrawal of US private equity firm KKR from a proposed £4 billion rescue package.

Leonie Dubois, a representative from the company, stated they are “dedicated to strengthening the company’s financial stability.”

In response to a question posed by Labour MP for Monmouthshire, Catherine Fookes, Reed affirmed that Thames Water “remains financially stable,” noting the government’s heightened readiness for potential nationalization.

“The government will always prioritize the national interest in these matters,” he remarked.

Thames Water provides services to approximately 25% of the UK’s population, primarily in southern England and London, employing around 8,000 staff members.

However, the company is burdened by significant debt and is grappling with issues such as leak repairs, sewage spill prevention, and modernizing outdated systems.

In May, the company’s chief executive informed legislators that its survival hinges on the regulatory body, Ofwat, exhibiting leniency regarding fines and penalties for environmental breaches.

The BBC has learned that KKR’s exit from the investment deal was partially influenced by the political and regulatory risks associated with the firm.

Yet, during Thursday’s discussion, Mr. Reed emphasized, “Thames Water must fulfill its statutory and regulatory responsibilities to its customers and the environment—it is only fair that the company faces the same repercussions as any other water provider.”

When queried about the possibility of the firm entering government-supervised administration, Ms. Dubois replied, “We are focused on servicing our customers with water and managing their sewage, so it’s business as usual for us.”

“We’re committed to placing the company on a more solid financial foundation and we remain focused on our core responsibilities,” she added.

In a separate statement, Thames Water expressed: “Our priority is to achieve a comprehensive and fundamental recapitalization, aiming for a market-driven solution that targets investment-grade credit ratings.”

Regardless of ownership changes, Thames Water’s water services will continue unaffected.

Currently, Thames Water is essentially owned by its creditors, and a consortium of these lenders has developed a plan to raise equity, which sources indicate is fully funded and ready for implementation.