Bumper pay: Boss Liv Garfield took home £3.2m for the 2022-23 financial year

Severn Trent is seeking £1 billion in funding, including £500 million from Qatar, to address sewage pollution issues.

The utility group announced a share placing yesterday, with the Qatar Investment Authority set to contribute half of the funds, as the company faces mounting pressure to improve its operational cleanliness.

Severn Trent aims to raise an additional £500 million from institutional investors, £7 million from retail investors, and several undisclosed company directors will purchase shares worth £275,000 each.

Severn Trent, listed on the London Stock Exchange, is one of the largest water suppliers in the UK, serving 4.6 million households and businesses in the Midlands and Wales. The cash infusion will support a £12.9 billion transformation plan aimed at preventing sewage overflow during storms and reducing leakages.

Ofwat, the industry regulator, recently criticized the poor performance of UK water companies and ordered the worst offenders (excluding Severn Trent) to refund £144 million to customers.

In 2021, Severn Trent paid a £1.5 million fine for illegal sewage dumping following legal action taken by the Environment Agency. The previous year, the company was fined £800,000 for discharging £3.8 million liters of raw sewage into a stream between 2014 and 2016.

As part of its five-year plan from 2025, the company aims to achieve a 16% reduction in leaks and a 30% reduction in spills from storm overflows, which lead to the contamination of rivers with raw sewage.

Water suppliers have faced criticism for raising bills and paying large sums to executives and investors while pollution incidents remain high. Severn Trent’s CEO, Liv Garfield, received £3.2 million for the 2022-23 financial year, and the company disbursed £261 million in dividends.

Customer bills are expected to increase by 37% by 2030, rising from £379 in 2025 to £518. To assist struggling customers, the company plans to allocate £550 million of the investment package.

Garfield stated, “By 2030, we will have transformed our network to provide our customers with the best possible service.”

Full details of the transformation proposals will be released on Monday, along with the business plans of other major water companies in the UK for the period 2025-2030.