Competition between bidders has kept costs low, says Ofwat.

It’s not often we hear that a major sewerage project is set to be completed under-budget, but that’s exactly what’s happened with the brand new Thames Tideway tunnel, which is due to be funded by the 15 million customers of Thames Water.

Ofwat, the regulatory body for water and sewerage providers, has announced that customers will pay no more than £25 extra a year by 2025 to cover the costs of the project, with £7 of this figure already included in bills. Initial forecasts put the average cost at up to £80 per customer.

Costs have been kept so low thanks to the introduction of a bidding process, which promoted healthy competition between contractors and led to the best value deal possible.

Bazalgette Tunnel Ltd, a group of investors led by German insurance company Allianz, has been set up specifically to lead the Thames Tideway tunnel project, which was approved by the government in September 2014. The plan is to build a 16-mile long sewer to lessen the tonnes of untreated sewage that flows into the River Thames each and every year.

The group will be joining forces with Morgan Sindall and BAM Nuttall, and a contract worth £416 million has already been secured to provide the necessary resources to build a four-mile section of the tunnel.

The Thames Tideway project has been met with a great deal of opposition by local residents and green campaigners, with many industry experts voicing concerns that the tunnel will be a waste of money. But critics may be keen to change their tune now that significant savings have been achieved through “going out for competition on the construction and financing costs of the tunnel”, as Ofwat’s Chief Executive Cathryn Ross has stated in a recent article.

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