(Bloomberg) -- The UK approved plans for Thames Water Utilities Ltd. to build a controversial £2.4 billion reservoir in Oxfordshire to help avoid drought in London and southeast England in the coming decades.
The government also agreed to let the company move ahead with a new water recycling plant in Teddington, in southwest London, the company said in a statement Wednesday.
The projects are part of Thames’ so-called Water Resources Management Plan. A decision on the plan, which is required by law, had been expected at the start of this year, but had been delayed by the previous government.
Both projects have faced widespread public opposition from local residents and politicians. The reservoir, which will be publicly financed, will cover a seven-kilometer-square site near Abingdon, in Oxfordshire. It’s set to be so big — with a capacity of 150 billion liters of water — that once built, it will take two winters to fill.
The plan will help the company invest in new infrastructure projects, drive down leakage and reduce water demand, Chief Executive Officer Chris Weston said. “In turn, this will significantly reduce our reliance on groundwater sources that draw from chalk streams, protecting the local environment.”
The decision comes as Thames Water races to find investors who can provide £3.3 billion of new equity before it runs out of money at the end of May. It’s also seeking to raise customer bills by as much as 59% over the next five years, while facing public anger over chronic leaks and sewage spills.
London uses about two billion liters of water every day on average. Thames estimates that by 2050 that will have risen by another one billion liters to serve a growing population — expected to hit close to 11 million within 30 years — and cope with the impact of drier summers and climate change.
Opponents say Thames has overestimated future population growth and wouldn’t need to build such a big reservoir if it put more investment into stopping leaks. Thames has the worst performance record of any of the UK’s 16 water and sewage utilities, according to the industry regulator Ofwat.
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