Filenews 7 July 2024 - by Eleftheria Paizanou
The summer will pass and then, as everything shows, the imposition of a cap on the selling price of bottled water will be implemented at specific points of sale, such as airports, ports, stadiums, remote beaches, theatres, cinemas, archaeological sites and museums. This is if the bill that has been pending in Parliament since March is approved as it stands.
Although the bill will be put back to the House Commerce Committee on Tuesday, reservations in both parties and affected professional bodies may prevent it from going to the full House on Thursday, July 11.
This is despite the calls of the President of the Republic, Nikos Christodoulides, and the Minister of Energy, George Papanastasiou, who in their letters to Parliament called on the members of the competent committee to complete the discussion of the bill and bring it to the plenary of the Parliament before the recess of work for the summer recess.
The two officials argued in their letters that this is a particularly important bill, since in the first phase it concerns the imposition of a retail price cap on water and consumers are expected to benefit significantly, especially during this summer season.
On Tuesday, the discussion of the bill will continue, in the presence of the Minister of Commerce and stakeholders will have the opportunity to develop their arguments against the government proposal. Members of the Commerce Committee will then decide whether or not the bill will ultimately go to plenary.
A member of the committee, speaking to "F", said that when the Government is presented to Parliament it will have to give convincing answers to the questions that will be submitted. He also noted that the concerns of stakeholders who disagree on the imposition of the water cap at certain points should be removed, as, as they argue, competition will be affected.
As we have been told, if the reservations are dispelled, then the bill will go to plenary on Thursday, otherwise the government proposal will be discussed in the Commerce Committee in the autumn. Therefore, the next 24 hours will be decisive for the future of the bill, which the Government fervently wishes to implement immediately.
The reservations of entrepreneurs
"F" presents the points and provisions of the bill with which market participants disagree.
– OEB, in a note to the Parliament, expresses its disagreement with the Ministry's intention to intervene in the operation of the market, pointing out that setting a ceiling on the selling price of any product is a setback of decades, which will even have the opposite of the desired results. He also notes that the state should understand that any intervention in the market will also have negative consequences, such as the possible increase in the price of the product in places that serve many consumers and which will not be included in the decree of the Minister of Energy. He also indicates that the points of sale that will be capped mainly concern places where the state has an economic interest, pointing out that de facto businesses sell at higher prices due to the royalties collected by the government.
According to OEB, at airports the state collects 32% of revenues. It also indicates that the reason for the increased price is not reduced competition but the conditions under which a business operates. At airports, he notes, there are two businesses operating and there is competition between them. At the same time, he emphasizes that the price of water sales at Cyprus airports compares favourably with all airports in Europe.
Finally, he says that no one wants to pay the supreme good of water at an unrealistic price, but points out that some people cannot think that the problem is solved in some individual places, which they visit a few times a year, and that citizens are forced to buy water on a daily basis more expensive than they buy it today.
– The CCCI, in a letter, expresses its disagreement with any form of state intervention in a free economy, as well as with the setting of maximum retail prices for any products. According to the CCCI, by imposing a price cap on certain sectors or places in an open market, there is a serious risk that shortages of certain products will occur if the price cap is not at the right level or that it will lead the rest of the market to increase prices, thus burdening citizens.
«A high price on a product, e.g. imported water, which has different production costs, freight rates and management costs, does not necessarily mean that it is unjustified. We believe that in order to reach accurate conclusions, one should carefully examine the data and particularities of each sector and not rely on impressions or beliefs," he adds.
He also argues that there are conditions such as seasonality and extended working hours, which lead to increased operating and labour costs, but there are rents and rights to use space, which in many cases end up in state coffers.
Why are suppliers worried?
Five issues are raised by the Association of Suppliers, which also expresses reservations. He argues that the bill is unfair and will create unfair competition between Cypriot waters and imported ones, adding that the cap will prohibit the disposal of imported waters.
If the water price cap is applied, imported water will become non-marketable and airports will remain with only Cypriot water. It indicates that the companies supplying the imported waters have agreements in force with Cypriot airports, for the period 2023-206, with specific targets and prices, following negotiations between suppliers, producers and managers of Larnaka-Pafos airports.
They stress that the products have been ordered and any changes or restrictions that arise will cause huge losses to suppliers and customers.
Meanwhile, Cyprus Duty Free, which operates the duty and duty free shops, argues that Larnaka and Paphos airports should not be included in the provisions of the bill, as there is sufficient competition. He also stresses that the state will also lose income due to increased operating costs at airports, resulting from the contract of companies operating at airports with the state.
According to the European Commission, there is no need to regulate a price cap for the sale of water, as there is free access to fountains and running water at European airports. For the EU, tap water or fountains are alternatives that provide sustainable and less costly options to citizens.
