PSC pushes public-private plan to cut bottled water costs

– proposed review of taxes, distribution margins

The Private Sector Commission (PSC) and representatives of the bottled water industry have agreed to pursue a collaborative public-private sector initiative aimed at reducing the cost of bottled water, strengthening local manufacturing, and ensuring that the resulting savings are ultimately passed on to consumers.

The agreement follows a further engagement on Wednesday involving Minister of Public Utilities and Aviation Deodat Indar, representatives of Guyana Water Incorporated (GWI), executives of the PSC and private-sector bottled water manufacturers. During the discussions, production costs and distribution margins were identified as the two key factors contributing to the price of bottled water. Against this background, the private sector proposed a two-phase approach to addressing the concerns surrounding the cost and availability of bottled water.
The first phase would focus on the standardisation of polyethylene terephthalate (PET) preforms used by local manufacturers, where technically feasible, alongside the development of local PET preform manufacturing capacity through a public-private partnership or broader private sector consortium. PET-related inputs were identified as a significant component of production costs. Local production of PET preforms could also benefit other industries that rely on PET packaging. The second phase would address environmental tax and other input costs, as well as distribution and retail margins. The private sector emphasised that reducing manufacturing costs alone would not necessarily result in lower prices for consumers if excessive distribution and retail margins remain within 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. Minister Indar indicated that Government will examine the movement of bottled water through the supply chain, including distributors, supermarkets, and other intermediaries, as well as the margins applied at various stages. He further clarified that Government intervention is intended to address the immediate affordability challenge and does not necessarily signal permanent Government participation in the bottled water manufacturing sector. A defined period of Government involvement, together with a clear transition and exit strategy, was discussed as a possible component of a public-private arrangement. The private sector will now submit formal proposals identifying participating manufacturers, opportunities for PET preform standardisation and local production, recommendations regarding the lowering or removal of environmental tax and VAT, distribution arrangements and a proposed framework for Government’s eventual transition or withdrawal. These proposals will then be submitted to Cabinet for consideration. The PSC welcomed the progress made and reaffirmed its commitment to working with Government to improve affordability for consumers, strengthen local manufacturing, and protect confidence in private sector investment. The Commission stressed that 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.