Difficult mission for Bond as water crisis grows

Yorkshire Water: City analysts lukewarm at appointment of industry insider as new managing director
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The Independent Online

Industrial Correspondent

Beleaguered Yorkshire Water has moved to defuse rows over water shortages and quality of service by appointing Kevin Bond, chief executive of the National Rivers Authority, as the managing director of the core business.

The appointment of Mr Bond, 45, to the pounds 135,000 a year post follows months of adverse publicity since the drought in the middle of the year. But the move failed to impress some City analysts who had been expecting an appointment from outside the industry. One analyst said: ''This is pretty neutral. The NRA is a quasi-government body and hardly the most dynamic organisation in the world."

Paul Taylor, Yorkshire regional manager for the customer service committee of the regulator, Ofwat, said: ''We welcome management with an interest in water and an understanding of the issues, but I cannot comment on this individual"

Mr Taylor said that the main priority was for the company to end the long-running uncertainty for customers about the supply situation in the region. He called on Yorkshire Water not to go ahead with possible "rota cuts" which could leave some people without supplies on alternate days and which may begin in the New Year.

The appointment of a new managing director has been delayed by the difficulties the company has experienced in recent months. Tony Ward, Mr Bond's predecessor, had intended to retire in September but this has now been deferred until early next year.

Sir Gordon Jones, chairman, said:"Kevin's experience of the water industry and his understanding of the many complex issues it faces will be of great assistance to Yorkshire water. He has a demonstrable commitment to customer service and to environmental improvement and will be a valuable addition to the water services business and to the plc board."

The shares closed last night up 1p at 624p. The company added that the arrival of Mr Bond brings it close to the end of a restructuring which has taken place over the last two years. Recently Yorkshire appointed a new finance director: Brian Wilson, formerly with Norweb, the electricity company.

Yorkshire Water's problems were exacerbated in November when it emerged as one of several firms singled out by the watchdog, Ian Byatt, for failing to come up to scratch on some water treatment and pollution issues. Ofwat said yesterday that the appointment of Mr Bond was an issue for management but that it viewed it as "interesting".

Two weeks ago the firm dealt a further blow to its angry customers by saying that it was considering compulsory metering. At the same time it announced that it had continued to lift profits during the summer when water supplies were at risk.

Yorkshire announced a 10 per cent rise in underlying profits for the six months to September. Including a pounds 25m restructuring charge, which held back 1994's first half, profits jumped 48 per cent in the period, from pounds 67.2m to pounds 99.5m. The company is likely to have to invest pounds 75m to increase water resources and stem leaking pipes. Yorkshire currently loses 26 per cent of its supplies before they reach the taps.

The problems show little sign of abating. Reservoirs which have normally regained 60 per cent of capacity by this time of year are only 20 per cent full - as low as they have been all year. The company is moving water by road tanker to the worst-hit areas at a cost of pounds 3m a week.