It seems that the biggest British water service provider is on the brink of bankruptcy. The article pointed out that the government is ready to intervene and this is obvious, water service cannot be stopped, it would put the lives of millions of people at risk. The issue is that this give a lot of bargaining, or blackmail, power to the private operator. Nothing prevents them from extracting all the value from the companies they manage and them dumping the burden of the debt on the public under the threat of stopping an indispensable service.
Proponents of private services often argue that fraudulent bankruptcies would not happen because the provider would lose the company and all its value. But since all the value has already been extracted there is not much to lose and such cases do happen. Maybe that the nationalisation of the rail service in Wales is arguable because it was blamed on COVID-19. On the other hand it was followed by another case in Italy where the government overpaid to re-nationalise a road network left so much in disrepair that 43 people were killed in the collapse of a bridge.
Is there a way to prevent such cases? Can indispensable services in private hands really work without the risk of having to nationalise the losses every now and then?