Sachet water producers tell govt to reduce taxes on packaging materials for the industry

Sachet and Packaged Water Producers have asked the government to reduce taxes on the packaging materials for the industry.

They also called for the review of the import and customs duty formula for the raw materials imported for the packaged water industry, freeze payment of Value Added Tax (VAT), Excise tax and other taxes on the packaged water industry, freeze government charges and fees for the packaged water industry and if possible, subsidize Electricity and water bills of the industry.

Similarly, they want a complete removal of all taxes on reusable jar bottles used for the dispensing machines.

A press attenent they issued said the 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,” a statement they issued said.

The statement added 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.

“Due to high increase of Diesel and other petroleum products, Diesel fuel for distributing packaged water to consumer centers now exceeds 25% of the product price.

“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,” it said.

It added “All the above sums up beyond 95% per the last packaged water new 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.

“Obviously, per 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 is no more sustainable.”

Below is the full statement…

DISTRESS CALL!!
PRESS RELEASE BY THE PACKAGED WATER PRODUCERS

THE NATIONAL EXECUTIVE COMMITTEE OF THE NATIONAL ASSOCIATION OF SACHET AND PACKAGED WATER PRODUCERS (NASPAWAP) WISHES TO SEND A DISTRESS CALL TO THE GOVERNMENT ON THE EFFECTS OF THE FALL OF THE GHANA CEDIS TO ALL MAJOR TRADING CURRENCIES ON THE PACKAGED WATER INDUSTRY AND THE NEED FOR GOVERNMENT TO ACT FAST TO AVERT THE TOTAL COLAPSE OF THE INDUSTRY.

This press statement is a distress call to government to as a matter of urgency to take strategic steps to stabilize the exchange rate between the Ghana Cedi and the major foreign trading currencies.

The 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.

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. Due to high increase of Diesel and other petroleum products, Diesel fuel for distributing packaged water to consumer centers now exceeds 25% of the product price.

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 new 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.

Obviously, per 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 is no more sustainable.

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 29ghc Ghc (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 22GhP for printed bags last year in October 2021.

A year on this October. 2022 each printed bag is selling at 45GHp. The PET preforms for producing bottles was sold at 17GHp for the 13 grams last year in October 2021. In October 2022, the same preform is selling at 35GHp.

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%.

Cost of Diesel and the continues fall of the Ghana cedi against its major trading currency is taking a toll on the packaged water industry and we are calling on the 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.

The packaged water industry was at the forefront during the covid 19 outbreak, portable water is an essential product, and the industry goes all length to ensure that it provides premium products to the public and 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.

We wish to call on the public to take a keen interest in all the analysis expressed above. Calling on the packaged water producers across the country to shut down production and distribution for a couple of days to press home our demands may have been the obvious thing to do but as an essential product provider, we are mindful of the repercussion of such action and the health hazards, it can pose to the citizens, more especially as most of the river bodies are highly polluted and most households depends on packaged water as the main drinking source, reported by the Ghana Statistical Service.

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.

Leadership of the packaged water industry will continue to update the public on the challenges, and if government did not attend to the call by a week from today, we will have no option than to pass on the cost to the public and possible shutdown of production and distribution for a week across the country.

Magnus Nunoo
President

Source: 3news