Portsmouth Water has awarded £208m worth of contracts to two companies for the creation of a flagship reservoir in South Hampshire, which will hold 8.7 billion litres of water once completed in 2029.

The firm, a portfolio company of experienced investor in critical infrastructure Ancala Partners, awarded £167m to Future Water MJJV Limited for the building of Havant Thicket Reservoir.

A further £41m was awarded to Ward & Burke Construction Limited, who will create a tunelled pipeline in the water-stressed region.

The award followed approval of planning permission for the reservoir and an agreement by Ofwat, the economic regulator for water companies in England, that the project should move ahead.

Lee Mellor, partner at Ancala, described the Havant Thicket Reservoir, the first major new water storage reservoir in the UK since the 1980s, as a "critical step" to enhance water security in the south-east of England, which will generate significant environmental benefits for decades to come. 

It has been enabled by an innovative financial, regulatory, and commercial partnership between Portsmouth Water and key project stakeholders.  

“We are delighted to support the project through £150m of further investment in Portsmouth Water and are grateful to the company’s management team, as well as the collaboration of Ofwat, customers and Southern Water, for their hard work, partnership, and support in developing this exciting project,” he said.

“Ancala focuses on proprietary investments in critical mid-market infrastructure where we can add meaningful operational value. 

“We are pleased to have worked closely with Bob and the team at Portsmouth Water over a number of years to solve complex operational, financial and regulatory challenges to progress this vital project.”

Portsmouth Water has agreed a unique long-term bulk supply agreement with neighbouring water company, Southern Water, with the support of Ofwat, to enable the reliable delivery of 21 million litres of water a day. 

In addition, Ancala is supporting Portsmouth Water to secure a £280m financing package to support the construction of the Havant Thicket Reservoir. 

The financing package includes £205m of innovative ESG performance-linked financing placing Portsmouth Water among a small leading group of utilities across Europe that are actively integrating ESG metrics into their financing strategy.

Alongside protecting environmentally sensitive chalk streams – the River Test and the River Itchen – the project will provide a new green leisure facility to benefit local communities and wildlife. 

There will be a new wetland to support local bird species, footpaths for walking, cycling and horse riding, facilities for bird watching, such as bird hides, and picnic and play areas. 

Ofwat recently published its final decision to approve a revised budget for the Havant Thicket Reservoir. 

This has enabled Portsmouth Water to award the two main design and construction contracts for the project, with further contracts, including for a new visitor centre at the reservoir, to be awarded in the coming years. 

Bob Taylor, chief executive officer at Portsmouth Water, said: “This is a major milestone for the Havant Thicket Reservoir project and for Portsmouth Water. 

“The reservoir will safeguard essential water supplies and protect world-renowned chalk streams – the River Test and the River Itchen. 

“Ancala’s continued financial and operational support has been crucial to enabling this major project.”