NI Water buys four water treatment plants from KWS

NI Water has forked out £28M to buy Kelda Water Services' holdings in four treatment plants that provide almost half of the treated water in the province. The strategic move brings all clean water production in Northern Ireland back into NI Water ownership.

Sara Venning

The move followed the decision by the Kelda Group to put the non-regulated businesses of Kelda Water Services (KWS) up for sale. This included the Project Alpha Public Private Partnership (PPP) contract operated by KWS. 

Len O’ Hagan, chairman of NI Water said: “We are pleased to announce the completion of the purchase of the Project Alpha companies. This brings back into NI Water ownership all clean water production in Northern Ireland.

“This represents a strong fit with NI Water’s strategy to provide clean safe drinking water to our customers and to do so in a way that secures efficiencies for our customers and for the public purse.”

NI Water has acquired all of the equity in the project from Kelda Water Services’ and will also assume responsibility for associated debt finance. The acquisition will allow NI Water to generate value from the project that will feed through to customers by way of reduced water tariffs, reduce resource DEL budgetary requirements, and allow NI Water to consider further efficiencies as to how the project will operate going forward.

NI Water chief executive officer Sara Venning said: “A strong dedicated local team of approximately 30 staff operates project Alpha and we look forward to working with them even more closely as part of the NI Water group. The completion of the sale with the support of both the Department for Infrastructure, and the Department of Finance will allow us to continue to improve the service we provide and the cost at which it is provided to all our customers.”

Venning added this was good news for consumers as “the value generated by this transaction will allow the company to apply a downwards pressure on tariffs. It also represents an opportunity for NI Water to reduce its ongoing running costs which releases public expenditure for reinvestment elsewhere”.

Recognising the importance of these key infrastructure assets to Northern Ireland, the strategic fit with NI Water’s clean water business and the potential to create further value and deliver savings, NI Water proactively made a successful bid to KWS to purchase their interests in Project Alpha.

Welcoming the announcement, Peter May, permanent secretary at the Department for Infrastructure, said: “When Kelda took on this contract in 2006, there was a need for substantial investment to upgrade the treatment of water to meet EU standards which was over and above what government was able to commit to at that time. When the opportunity arose to bring the contract back into government, the department, in consultation with NI Water and DoF, carefully considered the value for money against the benefits to be gained.

“The completion by NI Water of this transaction will allow them to secure further value to the public purse and will also create an opportunity to free up significant additional operating resource. We welcome the initiative taken by the Board at NI Water in pursuing the opportunities created by the acquisition.”

Kelda Water Services confirmed NI Water as its preferred bidder in July 2017. This has resulted in NI Water completing the acquisition this month.