Ofwat tightens rules on water companies' dividend policy

March 20 (Reuters) - Water industry regulator Ofwat said on Monday it would stop the payment of dividends if they risk a water company's financial resilience, and take action against firms that don't link dividend payments to performance.

The regulator, which oversees the privatised water and sewerage industry in England and Wales, said the changes to company licences would reduce the risks that a firm's poor financial health may pose to customer interests and its ability to invest to protect the environment.

Ofwat said the change would require company boards to take account of their performance - for customers and the environment - when deciding whether to make dividend payments, and also maintain a higher level of overall financial health.

The watchdog said it would give incentives to companies to strengthen their financial health to improve investment in water and wastewater projects.

Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Sonia Cheema

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