United takes pounds 90m charge on Thai project

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The Independent Online
United Utilities yesterday became the latest British water company to run into trouble overseas after disclosing that it is facing a loss of up to pounds 90m on a sewage project in the Thai capital of Bangkok.

The group, which owns North West Water and Norweb, said it was taking an pounds 83m provision in this year's accounts after encountering further delays and problems on the pounds 150m contract begun in 1993.

United Utilities had already taken a pounds 7m charge against the contract in its 1994/95 results after the scale of the potential losses began to emerge. The provisions are equivalent to a third of last year's annual pre-tax profits of pounds 272m. The shares fell 6p to 667.5p

The company insisted yesterday, however, it had a strong case for recovering the additional costs and it intended to pursue its claims vigorously.

A spokesman said the delays and additional costs had resulted from changes in the specification of the contract to build a sewage treatment works and network in the Thai capital and the failure of the client, Bangkok Metropolitan Administration, to provide proper site access.

Changes in government regulations had also limited the contractors to working only four hours a day in certain areas of the city and then only if the work was carried out at night and did not cause noise.

Negotiations over the cost and time overruns with the Governor of Bangkok and the central government had been progressing favourably as late as December.

However, the Governor informed United Utilities last month that its claims were no longer valid, meaning the dispute will have to go to arbitration. United Utilities has since pulled out of international construction activities, in common with other water companies which have suffered heavy losses, notably Thames Water which took a pounds 100m charge last year.