-a possible sign that GWI plant off the table
The Private Sector Commission (PSC) and local bottled-water manufacturers have proposed a public-private arrangement to reduce prices, a possible sign that the government may back away from a much ridiculed proposal for the state to have its own $500m plant.
The proposal follow a second meeting on Wednesday between Minister of Public Utilities and Aviation Deodat Indar, Guyana Water Incorporated (GWI) officials, the PSC and representatives of major bottled-water producers.
In a statement yesterday, the PSC said the parties had agreed to pursue a collaborative approach aimed at lowering prices, strengthening local manufacturing and ensuring that any savings were passed on to consumers.
The talks followed concerns over the National Assembly’s approval on July 27 of $496.3 million for GWI to establish Guyana’s first state-owned bottled-water plant.
Local manufacturers had warned that the venture could place the state in competition with businesses already operating in the sector, discourage investment and divert GWI from its primary responsibility of supplying potable water. Two of the largest private sector companies in the country produce bottled water.
President Irfaan Ali has rejected calls for the project to be abandoned, saying GWI has a responsibility to provide affordable drinking water and is “not in competition with anyone”.
The contestation over bottled water also underlines the policy muddle that the government often times finds itself in. In February this year, Ali complained about foreign bottled water on the market and that apparently became the impetus for the GWI plant, money for which was recently approved in Parliament. Affordability of water had not been the issue then but that is the direction talks have taken particularly since the widespread criticism of the proposal.
According to the PSC, the latest discussions identified production expenses and distribution margins as the two principal contributors to bottled-water prices.
The private sector proposed a two-phase approach to address both the cost and availability of the product.
The first phase would seek to standardise polyethylene terephthalate (PET) preforms used by local manufacturers where technically possible. PET preforms are the moulded plastic components that are later heated and shaped into bottles.
The PSC also proposed developing local PET-preform manufacturing capacity through either a public-private partnership or a consortium of private businesses.
“PET-related inputs were identified as a significant component of production costs,” the statement said.
It added that producing the components locally could also benefit other industries dependent on PET packaging.
The second phase would address environmental tax, value-added tax and other input costs, along with distribution and retail margins.
The PSC warned that lowering manufacturing expenses would not necessarily result in cheaper bottled water if excessive distributor and retailer margins remained in the supply chain.
“The lowering or removal of environmental tax and VAT, together with a review of distribution arrangements and retailer mark-ups, was therefore identified as critical to achieving meaningful price reductions,” it said.
Cabinet proposals
The PSC said Indar indicated that the government would examine how bottled water moved through the supply chain, including the role of distributors, supermarkets and other intermediaries, and the margins applied at each stage.
According to the commission, the minister also clarified that the proposed state intervention was intended to address the immediate affordability problem and did not necessarily signal permanent government involvement in bottled-water manufacturing.
A defined period of state participation, accompanied by a transition and exit strategy, was discussed as a possible component of the public-private arrangement.
The private sector is now expected to submit formal proposals identifying participating manufacturers and opportunities for standardising and producing PET preforms locally.
The submissions are also expected to include recommendations on environmental tax and VAT, distribution arrangements and a framework for the government’s eventual withdrawal.
The proposals will then be submitted to Cabinet for consideration, the PSC said.
Neither a timetable for the submission nor a date for Cabinet’s consideration was disclosed.
Recently the Guyana Manufacturing and Services Association (GMSA) had urged the government to review the GWI project, arguing that the state should work with established manufacturers instead of creating “a taxpayer-funded competitor to existing private industry”.
The GMSA said its members had invested substantial capital, developed distribution networks and created employment in the sector. Banks DIH Limited and Demerara Distillers Limited are among the major local producers.
It supported the government’s objective of replacing bottled-water imports with local production but maintained that the initiative should reduce costs and expand capacity throughout the existing industry.
“Any initiative by the state should be structured to strengthen, not to compete with or undermine, that existing private investment,” the GMSA had said.
It also argued that GWI’s principal responsibility should remain the delivery of safe and reliable potable water to households.
GWI has estimated that locally treated and bottled water could be sold for approximately $100 per bottle or less if operating costs are efficiently managed.
Ali announced the initiative in February and set a target for all bottled water consumed in Guyana to be produced locally within 12 months. He also proposed cooperation with the private sector and shared production infrastructure, including standardised bottle manufacturing.
The PSC said its delegation to Wednesday’s meeting was led by Chairman Captain Gerald Gouveia Jr and included Vice-Chair Kathy Smith, Honorary Secretary Josephine Tapp-Rutherford, GMSA President Rafeek Khan and PSC Trade and Investment Chairman Timothy Tucker.
Representatives of Blue Spring Waters, Clear Waters, Pure Waters, Aquafina and Banks DIH also attended.
Indar was accompanied by GWI Chief Executive Officer Shaik Baksh, Business Development Executive Director Jaigopaul Ram, Finance Executive Director Mark David, Monitoring and Evaluation Officer Julie Mingo-Todd and Communications Manager Travis Bruce.
The PSC said it remained committed to working with the government to improve affordability while strengthening local manufacturing and protecting confidence in private investment.
“The objective must remain clear: to reduce the cost of bottled water while supporting the private sector that is already investing, producing, and creating jobs in the industry,” it said.
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