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Manufacturers censure 158% proposed water hike and warn about company exits

Puerto Rico water service would be 129% more than Singapore, our nearest competitor

By Marialba Martinez of Caribbean Business

August 11, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

The Puerto Rico Manufacturers Association (PRMA) censured the proposed 158% increase in the cost of water proposed by the island’s Aqueduct & Sewer Authority (Prasa), stating that if the agency didn’t have a monopoly on this natural resource it would never make such a recommendation.

"Even though Prasa’s water monopoly affects many [on the island], the same can’t be said for multinational companies in Puerto Rico that could easily decide to leave," said PRMA President Reynaldo Encarnación during a public hearing. "At this state, there are U.S. mainland companies on the island that have enough excess capacity to consolidate their businesses stateside, as they watch operational advantages disappear locally. At the same time, local manufacturing companies competing globally are evaluating whether to leave Puerto Rico because they can't deal with [high operational] costs."

According to PRMA research, the cost of water (including sewer services) in other countries will be far less than the proposed increase in Puerto Rico, estimated to rise from approximately $1.60 per cubic meter to $3.07 per cubic meter, approximately 129% more than Singapore’s $1.34 per cubic meter, our closest competitor. In China, the cost of water and sewer services is 30 cents per cubic meter while Ireland and India’s water- and sewer-services costs are nine cents and five cents per cubic meter, respectively.

The PRMA also opposes Prasa’s proposed single rate for all sectors within the manufacturing industry, citing the diversity of water and sewer usages each industry sector has. The organization proposes that companies that use water as a raw material be granted a tariff that incentivizes production, instead of deterring it.

"Puerto Rico’s production costs are higher than the majority of jurisdictions we compete with, but until now, water costs didn’t figure as a problem," said Encarnación. "We also didn’t confront a system representing a competitive advantage. The poor-quality water service and the need for manufacturing companies to finance their own treatment plants, and in many instances develop their own water-service facilities, are areas that already needed improvement.

"We recognize the efforts of [Prasa President] Jorge Rodríguez to correct and improve the agency’s past wrongdoings, but resolving the agency’s problems because of the [$400,000] cut in subsidies from the central government by passing it on to its clients isn’t fair and is indeed dangerous for the companies that aren’t willing to pay for the agency’s incompetence," Encarnación added.

This Caribbean Business article appears courtesy of Casiano Communications.
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