Water industry watchdog Ofwat will halt the payment of dividends by water company if it tests their financial resilience and take action against group’s that fail to link dividend payments to performance.
Ofwat said on Monday that changes to company licences will lower the risk of a firm’s weak financial health impacting customer interests and its ability to pour cash into protecting the environment.
The regulator stated the change will require companys to take account of their performance, for both customers and the environment, when deciding whether or not to make dividend payments, and also maintain a higher level of general financial health.
Ofwat added that it will provide incentives to companies to strengthen their financial health to improve investment in both water and wastewater projects.
Reporting by Iain Gilbert at Sharecast.com
