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Local content kills industry

On Wednesday, the Sustainable Energy Society of Southern Africa (Sessa) said that the domestic low-pressure solar water heater sector has been abolished due to ‘technical red tape’ around the percentage of local content.

Chairman of Sessa, James Green said: ‘An industry has been destroyed by red tape. It is a tragedy that hundreds of companies have been put out of business. This has caused severe financial hardship to many small SMMEs that set up locally around the country, creating local employment’, the Cape Times reported.

In 2013, the Department of Trade and Industry (DTi) officially declared that the manufacturing of two key system components, the tank and collector tubes, must each comprise of 70% local content.

This has impacted Eskom’s tender process to install solar units as part of its rural solar heating scheme. The tender remains on the backburner as there are no local producers of collector tubes due to China remaining the dominant competitor in the market. Failing to meet DTi requirements, local tenders could not qualify.

‘You would have to import the raw material from China or Turkey, you would need a 100 percent reliable electricity supply and you would have to have a workforce cheaper than China’, Green said.

‘If the DTi made it a 70 percent overall local content, there would be no problem, because overall we’re already at over 80 percent local content. But they won’t’, he added.

In a survey released by Sessa, those with an invested interest in the industry have suffered exponentially. An estimated 4 500 jobs have been cut and personal risk has left some destitute. Warehouse facilities have been abandoned and numerous low pressure geysers have remained boxed for 18 months.

What the authorities say

Eskom spokesman Andrew Etzinger: ‘The industry can do 75 to 80 percent local content overall. A solution would be to combine the two parts and look at an aggregate level’.

According to Etzinger a total of 400 000 out of government’s 1 million solar heater goal had been installed— 80 000 high pressure, 320 000 low pressure.

Gerhard Fourie, official at the DTi said they had no plans to change the 70% requirement for local content indicating that they had identified 9 firms who were in compliance with the requirements. These companies manufactured flat plate, another component needed in solar technology, and not collector tubes.

According to Green flat plates are not suited to low pressure systems – ‘ the DTi’s asking us to make a product that doesn’t work’.


(Pic Credits: English passages)

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.