Financial and Strategic Review of Northern Ireland Water Service

Thu Feb 09 15:24:38 EST 2006
By Dr. William Baker and Dr. Richard Hern

In 2004, NERA was commissioned by the Department for Regional Development in Northern Ireland to undertake a financial and strategic review of the departmental Water Service, which is to become a self-financing, government-owned company. The review consortium includes UBS, Halcrow, the Royal Bank of Scotland, and Deloitte & Touche.

In this report, the consortium presents its recommendations, based on qualitative and quantitative analysis of options for the financing and management of Water Service, and for the associated regulatory arrangements. The report compares service standards and expenditure levels with others internationally; projects costs net of efficiency savings; and models interactions between the efficiency performance, the framework for economic regulation, the financial profile of the business, customer tariffs, and the value of Water Service as a business. The consortium evaluates a range of possible service provision arrangements, considering the acceptability and deliverability of each option, the implications for legal and corporate structure, the level of efficiencies likely to be achievable for a number of scenarios, and the feasibility of raising private sector finance.