The National Executive Committee of the National Association of Sachet and Packaged Water Producers (NASPAWAP) has made a distress call on government to as a matter of urgency act quickly toward depreciation of the cedi against major currencies to avert a total collapse of the industry.
According to a statement released by the association, the cedi’s fall against major currencies has affected the industry badly as it heavily depends on raw materials that are mainly imported.
“The packaged water industry relies heavily on imported plastic pellets or granules used in the manufacture of Polythene film 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 percent of the production cost for sachet and bottled water,” the release stated.
It further stated that diesel, which is used for distributing the packaged water to market centres for consumers, formed 15 percent of the product cost as at third-quarter last year. Due to the high increase of petroleum products, it now exceeds 25 percent of the product price.
The above plus some other costs, according to the association, make up more than 95 percent of production cost – which informed the association’s decision to increase the price of water in September. He added that it was done without considering taxes, regulatory fees and salaries, among others.
“Obviously, the last price announced in September is nothing to even meet the break-even cost of the packaged water industry. As a result, the industry is accumulating debt in its operations – to levels that are no longer sustainable,” it said.
Comparing the situation from October last year to the same period this year, the association indicated that the prices of various products used in production have doubled – making them expensive to buy.
According to the association, a year ago in October 2021, 1kg of Slf plastic roll was selling at GH₵14.5 (including Excise tax, VAT, NHIS, Get fund etc.). A year on, the same 1kg of Slf plastic roll is now selling at GH₵29 including all taxes. The reverse-osmosis membranes, used as the filtering medium, were selling last year October 2021 at GH₵2500 on average for the 80/40 types. In October 2022, it is selling at GH₵5,500.
“One can deduce from the analysis that the packaged water industry’s producer price inflation is over 80 percent,” the release stated.
They are therefore calling on government to: reduce taxes on the packaging materials for the industry; review the import and Customs duty formula for raw materials imported for the packaged water industry; freeze payment of VAT, Excise tax and other taxes on the packaged water industry; freeze government charges and fees for the packaged water industry; and if possible, subsidise electricity and water bills of the industry among others
The statement further urged association members across the country to shut down production and distribution for a couple of days to press home their demands. The statement further noted that the association will either increase the price of packaged water or shut down production if government does not respond to their call.