Water firm raises prices

The series of increases in fuel prices have taken their toll in the CNMI’s bottled water industry, with Saipan Ice disclosing that it would adjust the prices of its products beginning today.

The company’s vice-president, Ador Songcuan, said the company needs to increase its prices to survive.

“We cannot afford high fuel costs,” said Songcuan, who is also the company’s general manager and comptroller. “We have to do it as soon as possible.”

Songcuan said the company would adjust the retail store price of 5-gallon bottled water from $1 to $2 beginning today. He said the company would also adjust prices of its products for delivery orders to up to $3 possibly this week, higher than the previous overall average price of $1.55.

“At stake here is our business. If Mobil and Shell can increase [fuel prices] almost every week, water remains to be a necessity,” Songcuan said. “Hopefully, our customers will not pay more than $3 [for 5-gallon bottled water].

Songcuan said increasing fuel prices have significantly raised the company’s production and freight costs—as well as that of plastic, a petroleum by-product—despite implementing reduced work hours and other cost-cutting measures.

Saipan Ice’s fuel cost in May reached $7,200, much higher than the monthly total of up to $5,500 last year—an increment of close to 40 percent. Freight cost for a 40-footer container van has increased by almost double from $3,800 to $7,200, he added.

Songcuan said the company held on to plans of raising water prices for several months, but is now compelled to implement them for survival. He said yesterday’s average price of $1.55 is below the break-even cost of $2.

“With the average of $1.55, we’re not making any money,” he said. “We’re not actually increasing our prices. We’re going back to the old rates [when there was less competition in the industry].”

The executive also mentioned other factors that have impacted on the company’s expenses, including the need to maintain compliance with government regulations. He said the cost of sanitation permits for the company’s delivery trucks and drivers have also increased.

He also noted that the company is undertaking to construct an injection well with a cost of $40,000 to comply with the U.S. Environmental Protection Agency’s regulations, as well as the conduct of terrorism risk assessment.

Saipan Ice is the leading local water company in the CNMI, with an estimated market share of 40 percent, according to Songcuan, who added that there are 17 water bottling companies in the CNMI.

There was no immediate word yet if other bottled water companies in the CNMI are also going to raise their prices.

The price adjustment in bottled water prices came after a recent communication between the U.S. Department of Justice and the CNMI Attorney General’s Office in connection with the campaign against violation of consumer laws. CNMI consumer counsel Brian Caldwell disclosed receiving communication from the Justice Department’s Antitrust Division, which renewed its commitment to investigate and prosecute criminal violations in connection with the national government’s gas price monitoring project.

Caldwell had earlier filed with the Federal Trade Commission a complaint lamenting high retail prices of Mobil’s gasoline on Saipan, adding that pump prices on Rota and Tinian are even higher. He sought the FTC’s assistance in ascertaining whether or not the oil firm has violated consumer laws, a matter which the company vehemently denies.

Mobil has raised gas prices in the CNMI six times since the beginning of the year for a cumulative gallon price adjustment of 27 cents. It first raised its pump prices by 3 cents, and then 4 cents, before taking on four rounds of 5-cent adjustments. The price increases resulted in a cumulative gallon price adjustment of 27 cents this year.

Mobil gas stations on the islands now retail regular and super gasoline at $2.589 and $2.679 per gallon at full-serve rate. Self-serve rate for regular and super gasoline have reached $2.379 and $2.479, respectively.

Shell has raised retail fuel prices five times since January for a cumulative price adjustment of 25 cents per gallon. It first raised gallon prices by 7 cents in January, before increasing them again by 5 cents three times, and then 3 cents.

Shell stations on Saipan now peg regular and premium gasoline’s gallon prices at $2.429 and $2.529, respectively, at self-serve rate. Full-serve rates are slightly higher at $2.559 and $2.649. Shell also raised the gallon price of diesel by 5 cents on top of the previous $2.479 for a new rate of $2.529.