‘We have thought long and hard over this decision and know it will disappoint our partners in the project, said chief executive Robin Evans. ‘Ultimately, however, we have a finite pot of money and the needs of our existing waterways must take priority.’

Evans says around 16 miles of the Monmouthshire & Brecon Canal is currently closed and will require significant investment from BW over the next 18 months as it undertakes a massive repair programme to reopen it.

These works are essential for those businesses and communities that depend upon and contribute to the canal and BW says it is committed to getting it up and running in time for the 2009 cruising season.

While the failure of the lottery funding bid for the Cotswold Canals restoration (known as Phase 1B) was a major setback for project, BW remains optimistic that the restoration will be achieved in the future.

‘We hope that the £1.5m we have invested in the project to date will help to lay the foundations for the canals’ ultimate restoration and reintegration with the national network,’ said Evans. ‘In the meantime we will continue and complete the works at Oil Mills, expected at the end of April 2008, and shall work with the partnership to ensure an orderly handover of all the good work that has been achieved thus far so that it can provide maximum benefit to the remaining partners in the project.’

The decision will not affect BW’s involvement in other canal restoration projects which include the Manchester, Bolton & Bury Canal; the Helix project in Grangemouth; the Bow Back Rivers in London; the Liverpool Link and the Droitwich Canals.