Water Tolls Increased for Borjomi and Nabeghlavi
23 May, 2013
Tolls on the use of natural resources increased on extraction of only two mineral waters - Borjomi and Nabeghlavi for they are big fishes. Margebeli Water company holding license on bottling Nabeghlavi protests against the decision, arguing that it will affect its competition power and export and appeals business ombudsman for help. IDS Borjomi International enjoying an exclusive license on bottling Borjomi has not appealed to business ombudsman or made any comments as of yet.
As a matter of fact Georgian
government made a decision to increase toll on extraction of all mineral and spring water in this past April. However a week ago Ministry of Economic Development changed its decision and increased charges on extraction of Borjomi and Nabeghlavi alone as the remainder water producing companies cover insignificant market share. The tolls increased by 200% from GEL 10 and GEL 6 per 1000 liter of Borjomi and Nabeghlavi to GEL 30 and GEL 18 respectively. The governmental explanation for increase the tolls on water extraction was that water producers are enjoying high profit margins and they can easily handle with the higher charge without increasing price on the product and affecting their businesses. But enhancing the burden on water extraction only for two companies is not fair and will affect competitive power of the company at export markets for no other country imposes that high tolls, Avtandil Svimonishvili, Director General of Margebeli Holding that incorporates Margebeli Water company producing Nabeghlavi, said in the interview to Georgian Journal. He hopes to find consensus with government through ministration business ombudsman.
“It will affect our competitive power at both internal and export markets for the small local water producer companies can get stronger while we may lose positions. Besides our European competitors are charged just by EUR1 per 1000 liter that translates into GEL 2.13 that is much lower of our charge,” Svimonishvili said. Soso Archvadze, an economic analyst, shares governmental approach that water companies enjoy big profit margin and have no reason to complain. Svimonishvili counters that his company stakeholder enjoy no dividends and invested the profit completely in development of Marneuli Food Plant and Marneuli Agro – both parts of Margebeli Holding competing with the import successfully.
“There should be another approach, and it should be taken into account that the profit of the company is reinvested in development of the company,” Svimonishvili elaborated. Giorgi Gakharia, a business ombudsman promises to delve in the issue properly, research the company’s financial and market positions and only after make conclusions whether or not the market competition is violated.
“Borjomi and Nabeghlavi brands differ from other [emerging] brands and the difference in charges [on water extraction] among brands is normal. The problem as far as I understand is how adequately the charge increased. We will say our opinion after researching the issue,” Gakharia told GJ.