Thames Water, Britain’s largest water supplier, has warned it will exhaust its cash reserves by March 2025 if it fails to secure urgent court approval for a £3 billion financial rescue package.

Without the deal, the heavily indebted company could be forced into temporary nationalisation, piling further pressure on the UK’s already embattled utilities sector.

The funds are needed to address the company’s swelling debt load—its operating division’s net debts rose to £15.8 billion in the six months to 30 September, up from £14.7 billion a year earlier. Overall debt remains even higher, previously estimated at more than £19 billion. Thames Water, which serves 16 million customers across London and the Thames Valley, has two critical court hearings scheduled for December and January to secure the liquidity extension.

Should the courts and creditors agree to the deal, Thames Water’s finances would be steadied only until October next year. Longer-term stability hinges on raising an additional £3.25 billion in equity, earmarked for essential upgrades to its water and waste infrastructure through the rest of the decade. Investors, including international players like Covalis Capital and Hong Kong’s CK Infrastructure Holdings, have expressed interest but remain cautious as they await clearer terms from the UK government, water regulator Ofwat, and Thames itself.

The urgency comes amid mounting public anger over the utility’s environmental record. Thames Water reported a 40% increase in pollution incidents over the past six months, recording 359 category one to three cases. Chief executive Chris Weston attributed the spike to “record rainfall and groundwater levels,” but critics argue this highlights the urgent need for better investment and stewardship. Surfers Against Sewage and Liberal Democrat environment spokesperson Tim Farron both called for stronger intervention, with Farron suggesting that “the government must put this broken firm into special administration.”

Despite the grim outlook, Weston insisted progress is being made, noting the agreement in principle for the liquidity extension as evidence of moves towards “a more stable financial footing.” He has also defended staff bonuses totalling £770,000—his own three-month bonus from earlier in the year amounted to £195,000—arguing that competitive pay is essential to attract and retain the talent required to turn around the company.

Thames Water also faces pivotal regulatory decisions. Ofwat is expected to announce on 19 December how much water companies can charge consumers over the next five-year period. Thames has proposed a substantial 52% increase in bills, a move certain to face public and political scrutiny amid frustration over pollution incidents, stagnant wage growth, and the rising cost of living.

The coming months will be crucial. Thames Water’s ability to secure short-term liquidity, attract long-term investment, and convince regulators and customers that it can mend its environmental and financial woes will determine whether it can avoid the fate of nationalisation and restore confidence in Britain’s largest water supplier.