Soft Drink Makers May Pay Heavy Price

Subhash Narayan & Rajat Guha
Times News Network
June 26, 2007

NEW DELHI: Soft-drink makers and the bottled water industry are likely to bear the brunt of the government’s proposed cess on use of ground water by companies. As the levy would reflect usage—higher the consumption of water, higher the cess amount—these companies, being heavy users, would be hit the hardest.

The water resources ministry’s policy for “industrial use of water” also proposes a mandatory water audit on the lines of energy and heat audits. The rationale behind the government move is that for these industries, water is a raw material.

At present, the water cess varies between 20-25 paise (per kilo litre) from state to state. But the present regime does not make the distinction on the overall quantum of water consumption. Rather, state pollution control boards levy cess based on prescribed optimal use of water per unit of production.

“If the ground water withdrawal by the industry is in an over-exploited area, where ground water is in short supply, the rate of cess needs to reflect the scarcity value of ground water and could be a magnitude higher than other areas,” said a water resource ministry source.

Officials also said charges for ground water for industrial use from any source need to be rationalised in a way that cost of raw water is on a par with that of recycling waste water from the industry. The government would also make ground water measuring compulsory to monitor the consumption pattern of industries.

When contacted, Pepsi executive director Abhiram Seth said any regulation by the government should be transparent so that industry can benefit as a whole.

The government thinks imposition of the cess would drive industry to carry out technological interventions, leading to reduced use of water in production. If the proposal is accepted, the rates would be prescribed by the Central Pollution Control Board.

Commercial ground water use has bee a contentious issue for soft-drink companies. Soft-drink major Coca-Cola had to shut down its plant at Plachimada in Kerala in 2003 after charges that its plant was depleting ground water in the region. After a series of court cases, though it was granted conditional usage, Coke decided to shut the plant altogether.

Rival Pepsi too was charged with ‘over-exploitation of water resources’, also in Kerala’s Palakkad district, around the same time. Pepsi’s licence was annulled by the Panchayat. However, the plant resumed operations after being cleared of the charges by the local courts.

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