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A project licence was awarded to Bazalgette Tunnel Limited on 24 August 2015 by Ofwat to design, build, finance, operate and maintain the Thames Tideway Tunnel.

To help the private sector to finance this project at an appropriate price for customers, the Secretary of State for Environment, Food and Rural Affairs signed a series of contracts with Bazalgette Tunnel Limited. These commit the Secretary of State to provide contingent financial support, in certain specified circumstances, whilst the project is being built.

In addition the Secretary of State, Thames Water Utilities Limited, and Bazalgette Tunnel Limited signed an agreement which establishes a liaison committee to oversee the project鈥檚 progress.

All of these are long, detailed, technical legal contract documents.

Government support package

The government support package (GSP) consists of six core contract documents designed to support the Tunnel project should exceptional, highly unlikely risks happen, which the private sector could not cover at an acceptable cost, or at all. The six core contract documents are:

• supplemental compensation agreement
• market disruption facility
• contingent equity support agreement
• discontinuation agreement
• special administration offer agreement
• shareholders direct agreement

Liaison committee

The liaison committee will oversee the project鈥檚 progress. It will consist of representatives from the government (Defra), Thames Water Utilities Limited, and Bazalgette Tunnel Limited. The water industry regulator, Ofwat, and the Environment Agency, will be able to attend as observers. An independent technical adviser will report on the engineering aspects of the construction.

Government support package: process evaluation report

The purpose of this report was to assess the provision and commercial terms of the GSP to the Thames Tideway Tunnel. The report focuses on the:

• commercial terms of the GSP
• oversight of the project through the liaison agreement (which sets out the formal reporting requirements between the 3 main stakeholders - Tideway (Infrastructure Provider), Thames Water, and Defra)
• use of the Independent Technical Advisor (whose role is to review, evaluate, comment, verify and advise on the Infrastructure Provider鈥檚 assessment of the quarterly reports including cost and schedule)

This assessment involved in-depth interviews with key stakeholders. There was also a process evaluation to help determine if the GSP elements were both:

• the right ones to include
• could support the use of similar government support on other government sponsored projects or similar private sector projects

Findings showed the GSP was vital to making the Thames Tideway Tunnel investment-grade, attracting long-term low-cost financing while avoiding unintended impacts. It set an appropriate Threshold Outturn, supported effective governance, protected against key risks, reduced the weighted average cost of capital (WACC), and ultimately lowered costs for Thames Water customers without creating barriers to delivery.

The report is hosted on .