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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
The Puerto Rico Manufacturers Association (PRMA) censured the proposed 158% increase in the cost of water proposed by the islands Aqueduct & Sewer Authority (Prasa), stating that if the agency didnt have a monopoly on this natural resource it would never make such a recommendation.
"Even though Prasas water monopoly affects many [on the island], the same cant 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 Singapores $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 Indias water- and sewer-services costs are nine cents and five cents per cubic meter, respectively.
The PRMA also opposes Prasas 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 Ricos production costs are higher than the majority of jurisdictions we compete with, but until now, water costs didnt figure as a problem," said Encarnación. "We also didnt 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 agencys past wrongdoings, but resolving the agencys problems because of the [$400,000] cut in subsidies from the central government by passing it on to its clients isnt fair and is indeed dangerous for the companies that arent willing to pay for the agencys incompetence," Encarnación added.
This Caribbean Business article appears courtesy of Casiano Communications.