Thu | Aug 17, 2017

NWC competition could distort bottled water market, says PSOJ

Published:Wednesday | June 14, 2017 | 6:00 AMMcPherse Thompson
Charles Buchanan, head of NWC Corporate Communications, says the water agency will repond to the PSOJ.

If the state-owned National Water Commission (NWC) seeks to compete with private sector firms in the commercial operation of bottled water locally, it could possibly create distortions in the market, according to the Private Sector Organisation of Jamaica (PSOJ).

Moreover, such distortion could result in disinvestment by some firms already in the business, according to a statement from PSOJ President Paul Scott.

Last week, The Gleaner reported that the NWC has the capacity to supply almost 50 per cent of bottled water to companies in Jamaica, but has held back from producing and distributing its branded product commercially.

The company has been bottling water with the NWC label for about 15 years, but solely for the purpose of giving them away at events and functions.

NWC's Communication Manager Charles Buchanan was quoted as saying that a move could be made to go fully commercial with the product, but previous heads at the company had always figured that such a step would go against company mandate.

Contacted on Tuesday, Buchanan told Gleaner Business that he would not want to comment on the PSOJ's statement without input from NWC President Mark Barnett who is overseas on company business. However, he said the NWC will definitely respond at some point.

concerns

In the statement, the PSOJ says it is concerned by recent media reports outlining that the NWC is positioning itself to compete with private sector interests through the production of a retail branded bottled water.

The statement said further that "the PSOJ is of the view that the NWC should instead focus its resources on providing an efficient water supply system, which it has been mandated to do as a public-sector monopoly."

It quoted Scott as saying that "the PSOJ is disturbed that this has been proposed by the NWC, and hopes that the Government sees the folly in this move and prevents it from happening."

He noted that public sector organisations, especially essential monopolies, can compete unfairly by being less efficient but offer lower prices and will not only pass on that inefficiency to taxpayers but also negatively impact the private sector market players.

That would also greatly affect productivity, jobs and ultimately create a market distortion that would keep capital out of the market, said Scott.

"NWC is already being kept operational by taxpayers even though the water distribution system is very inefficient," said Scott.

"The NWC should therefore focus on finding solutions to fixing these inefficiencies and providing lower cost water to the country, thereby reducing the tax burden, instead of trying to compete in the private market," he added.

"The PSOJ is urging the Government to give the assurance to current and potential investors that they are not in support of public sector entities involvement in private sector activities as this would prove detrimental to the growing business confidence being experienced," the statement said.

Scott was not reached for comment and PSOJ Chief Executive Officer Dennis Chung was unavailable.

mcpherse.thompson@gleanerjm.com