RWE, the German owner of Thames Water, insisted yesterday that it was making progress with the sale of the UK water business, despite pushing back the deadline for final bids.

Harry Roels, chief executive of the energy group, said that the sale of Thames and American Water Works, its US business, would be completed before the end of the year.

RWE is still undecided on how to dispose of Thames and is examining options for both a float and a trade sale.

“At Thames Water we are continuing to keep both divestment options open: an IPO and a possible sale to long-term investors,” Mr Roels said.

“And in anticipation of your questions on the subject: Yes, we are conducting various talks. And no, I cannot reveal the names of any potential buyers,” Mr Roels said.

Two potential buyers are thought to be definitely interested in buying Thames: Guy Hands’s Terra Firma and a consortium led by UBS’s infrastructure fund, which involves the Qatar Investment Authority.

Other infrastructure and pension funds are thought to have looked at Thames, including Macquarie’s infrastructure fund and Borealis, the Canadian pension fund. However, it is not clear whether any of these will submit an offer before the August 15 deadline.

RWE wants to sell the water business to focus on electricity and gas, like its bigger rival E.ON. It is expected to raise at least £7 billion from the sale, despite the bad publicity that has surrounded London’s monopoly water supplier this summer.

Thames has the worst leakage rate of any British water company and loses almost a third of its water. It has consistently missed leakage reduction targets set by the regulator and was told to spend another £150 million on fixing pipes, to avoid a fine.

At the same time as it has been chastised for failing to get on top of the leakage problem it has imposed a hose pipe ban on its customers, who have also faced steep price rises.

Mr Roels said that the company’s ability to acquire energy businesses depended to a great extent on the success of the planned sales.

RWE reported a forecast-beating first-half operating profit of €4.1 billion (£2.77 billion), up 19 per cent, owing to rising electricity, gas and oil prices. The company’s shares fell 2.2 per cent to €68.37 after the company trimmed its profit forecasts. RWE npower, its UK energy, operation saw operating profits rise 30 per cent to €274 million.

The energy group also said it was considering building new nuclear power plants outside Germany, although it did not mention the UK. “We’re examining projects for new nuclear power stations in Europe,” Mr Roels said, adding that construction would depend on acceptance of the plants in the countries concerned.

Times Recommends

• ‘Thousands of Tamils dying’ in Sri Lanka camp
• Jackson 'rebuilt his nose before he died'
• Tehran: militiamen attack protesters