NEWS & ANALYSIS

DTI's local content rules for solar geysers costing jobs - Geordin Hill-Lewis

DA MP says industry claims that requirements essentially disqualify all local manufacturing companies

Parliamentary hearing needed on DTI solar-geyser rules

22 January 2015

The solar geyser manufacturing industry has claimed that the DTI's local content rules for solar geysers are too stringent and have resulted in 4500 jobs being lost in the industry. This is a serious matter, since the local content programme is supposed to encourage South African manufacturing and create jobs, not destroy them. These claims must be investigated fully to determine if the DTI's local content rules are indeed causing harm to local industry. 

I will today write to the Chairperson of the Portfolio Committee on Trade and Industry to request urgent Committee hearings on the DTI's local content rules for solar geysers, and in particular the effect these rules have on employment in the solar geyser industry.

The industry has argued that restrictive and irrational government procurement rules have resulted in an impasse between industry and government, as supply has become nearly impossible due to the stringent local content threshold. This has resulted in substantial job losses, with a recent survey by Sustainable Energy Society of South Africa (Sessa) estimating that least 4500 jobs have been lost.

In July 2013, the Department of Trade and Industry classified low pressure solar water geysers as a "designated product" under government procurement rules, which in effect requires that each component of the geyser must consist of 70 per cent local content.

The industry has argued that this local content prescription is too high, and in fact that it essentially disqualifies all South African manufacturing companies from producing and providing geysers for government's mass installation programme, which is supposed to see 1 million solar geysers installed in low cost houses by March this year. A more nuanced approach has been suggested, however subsequent delays have left the issue unresolved.

In light of the energy crisis we are currently facing, and the ability of this programme to significantly reduce the pressure on the national grid, any unnecessary hindrances must be swiftly addressed and resolved. 

It is the role of Parliament to conduct oversight and to ensure all government policy is rational and able to achieve its mandate, and therefore a hearing before the Portfolio Committee on Trade and Industry is essential.

Statement issued by Geordin Hill-Lewis MP, DA Shadow Minister for Trade and Industry, January 22 2015

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