The National Association of Sachet and Packaged Water Producers (NASPAWAP) has made a “distress call” to government to, as a matter of urgency, take strategic steps to stabilize the exchange rate between the Ghana Cedi and the major foreign trading currencies.
In a statement, the Association noted that the worsening exchange rate, and its resultant skyrocketing fuel cost plus the increase in power tariffs are badly affecting their business.
They explained that packaged water industry relies heavily on imported plastic pallets/granules used in the manufacture of the Polythene films and pet bottle preforms, that are used to package the treated water for consumers.
“It is important to note that packaging alone forms about 60% of the production cost for sachet and bottled water,” the statement said.
It added that “Diesel fuel used for distributing the packaged water to market centers for consumers was around 15% of the product cost as at the third quarter of last year. But due to the high increase of Diesel and other petroleum products prices, Diesel fuel for distributing packaged water to consumer centers now exceeds 25% of the product price.”
Again, electricity cost which used to be around 15% of the product price has increased to 20% of the product price as a result of the recent increase in utility tariffs.
“All the above sums up beyond 95% per the last packaged water prices announced in September 2022 without considering cost of capital, salaries and wages, taxes, bank charges, regulatory fees, machine and equipment cost/depreciation/parts replacement, distribution vehicles and its maintenance costs and other overheads,” NASPAWAP lamented.
According to the Association, the last price announced in September is therefore nothing to even meet the break even cost of the packaged water industry, adding that as a result, the industry is accumulating debt in its operations to levels that is no more sustainable.
Increased prices breakdown
“In practical terms a year ago in October 2021, 1kg of Slf plastic roll was selling at 14.5 Ghc (Including Excise tax, VAT, NHIS, Get fund etc). A Year on, the same 1kg of Slf plastic roll is now selling at Ghc29 (Including all taxes). The Slf roll is the film that is used to package sachet water, also known as sachet rubber.
”The outer bag was sold on the average at 22Gp for printed bags last year in October 2021. A year on this October. 2022 each printed bag is selling at 45Gp. The PET preforms for producing bottles was sold at 17Gp for the 13 grams last year in October 2021. In October 2022, the same preform is selling at 35Gp. The reverse osmosis Membranes, used as the filtering medium, was selling last year October 2021 at 2500 Ghc on the average for the 80/40 type. In October 2022 it is selling at 5500ghc. One could deduce from the analysis that the packaged water industry’s producer price inflation is over 80%.”
NASPAWAP reiterated the point that cost of Diesel and power, plus the continues fall of the Ghana cedi against its major trading currency is taking a toll on the packaged water industry so they want government to take urgent steps to ;
1. Reduce taxes on the packaging materials for the industry.
2. Review the import and customs duty formular for the raw materials imported for the packaged water industry.
3. Freeze payment of VAT, Excise tax and other taxes on the packaged water industry.
4. Freeze government charges and fees for the packaged water industry and if possible, subsidize Electricity and water bills of the industry.
5. Remove completely all taxes on reusable jar bottles used for the dispensing machines.
6. Call on the bank of Ghana to circumspect in the adjustment of the policy rate which is increasing the cost of borrowing from the banks to the businesses.
They noted that the packaged water industry was at the forefront of the Covid-19 fight during the outbreak, going to every length to provide portable water to the public, so, “it is important that as we are in distress, the government comes in to provide the needed support to ensure good health of the citizens.”
They also called on the public to take a keen interest in the matter, because the packaged water producers are at the crossroads but do not want to ask members to shut down production and distribution because water is an essential product and they are mindful of the repercussion of such an action and the health hazards it can pose to the citizens, particularly as most of the country’s water bodies are highly polluted and most households depends on packaged water as the main source of drinking water.
”It is important that the public, CSOs, the Head of faith based organizations, NGOs, Parliament of Ghana, Diplomatic missions and Others, support the packaged water industry by calling on the government to heed to the plight of the industry,” the statement said.
The Association however warned that if government did not attend to their call within a week from by today, “we will have no option than to pass on the cost to the public and possibly shut down production and distribution for a week across the country.”
Magnus Nunoo
President
0248145546
