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Infrastructure provider chosen for London's £4bn super sewer

Thames Water has selected a consortium of investors as the infrastructure provider for the £4bn Thames Tideway Tunnel super sewer.

A consortium featuring Allianz, Amber Infrastructure Group, Dalmor Capital and DIF will own, finance and deliver the project.

Known as Bazalgette Tunnel Limited, the consortium saw off competition from a rival group led by Prudential subsidiary Infracapital and Borealis.

The race to finance the ambitious project had been expected to end last month, but as Construction News revealed, the final decision was delayed after the competing consortia were effectively asked to rebid.

The winning consortium could provide around £1bn equity for the project.

The structure of the deal, which is similar to that of a project finance transaction, will see the infrastructure partner take on significant amounts of risk.

The appointment of an infrastructure provider means contracts can now be signed with the contractors named as preferred bidders on three separate sections of the 24 km tunnel.

These are:

  • Bam Nuttall, Morgan Sindall and Balfour Beatty Group (BMB) for the West contract;
  • Ferrovial Agroman UK and Laing O’Rourke Construction (FLO) for the Central contract;
  • Costain, Vinci Construction Grands Projects and Bachy Soletanche (CVB) for the East contract.

The West contract is worth between £300m and £500m, the Central contract is valued between £600m and £950m, while the East contract is worth between £500 and £800m, giving the project a potential value of up to £2.25bn.

The infrastructure partner, which will be independent of Thames Water and have its own Ofwat licence, will take on responsibility for managing the contractors on the project.

Thames Water said the impact the delivery of the project will have on customers’ bills will be revealed later in the summer “once all the contracts have been signed”.

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