Water companies `paranoid' about takeovers

KEN HARVEY, the chairman of South West Water, yesterday accused rival water company bosses of being "paranoid" for demanding the right to merge with other suppliers to counter the threat of foreign takeover.

Thames Water's chief executive, Bill Alexander, is leading a campaign to get the Government to drop its veto on mergers between UK water companies, arguing that the present policy puts them at a disadvantage compared with international rivals. "As long as you know nothing about the industry or are based abroad, you can buy a water company in the UK but I can't. That is crazy," he said earlier this week.

But Mr Harvey said: "Some people have almost a paranoia about getting bigger for the sake of it. I don't think there is any sense in that."

Both Severn Trent and Wessex Water were blocked from taking over South West Water. Since then, Wessex has been acquired by Enron, of the US.

Thames is gearing up to launch a bid for a rival supplier once the current price review is complete and a new industry regulator is in place. But Mr Harvey maintained that water company mergers would not necessarily benefit shareholders or customers.

He was speaking as Pennon, the parent company of South West Water, announced pre-tax profits before exceptional items of pounds 121.6m last year - unchanged on 1997. Profits from its unregulated business, Viridor, increased to pounds 24m - 15 per cent of the group total. Mr Harvey forecast that Viridor's sales this year would match those of the regulated water and sewage business.

The company has set up a pounds 2m contingency fund to cope with the influx of visitors to the South-west in August to witness the eclipse. An extra one million people are expected, swelling total numbers to three million. Water will be brought in by tanker or provided in bottles if supplies run dry.