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Firms land super sewer work

Construction companies win roles on major £4.2bn infrastructure programme for London's sewerage system
August 25, 2015

After more than a decade in the planning pipeline, financial terms have finally been reached for the £4.2bn Thames Tideway Tunnel (TTT) project. Costain (COST), Morgan Sindall (MGNS) and Balfour Beatty (BBY) are among the companies to have won roles in the modernisation of London's overstretched Victorian sewerage network.

The so-called 'super sewer', which will take seven years to build, will remove a large amount of the 39m tonnes of untreated sewage discharged into the river Thames each year. The 25km tunnel, which will run between Acton and Abbey Mills, has been divided into three separate joint ventures by Thames Water.

In a three-way venture, BAM Nuttall, Morgan Sindall and Balfour Beatty have won the £416m contract for the west portion of the tunnel, while the £605m contract for the east section will be handled by a joint venture between French firm Vinci and UK companies Bachy Soletanche and Costain, in which the latter has a 40 per cent stake. The central portion, worth £746m, was awarded to non-listed Laing O'Rourke and Ferrovial's UK subsidiary, Agroman. Infrastructure support service company Amey, also owned by Ferrovial, will manage the system integration.

Stephen Rawlinson, an analyst at investment bank Whitman Howard, said the project is "good news for the companies involved, but also for UK construction in general". Given that the companies have also been involved in construction and tunnelling projects for Crossrail, Mr Rawlinson believes the successful bidders' ability to transfer their highly sought-after skills is of critical importance.

The project is being funded by a senior debt facility and consortium of pension funds and long-term investors, including infrastructure group International Public Partnerships (INPP), which has taken a 16 per cent stake in the project and now counts TTT as the largest asset in its portfolio.