Megatron Federal scores R10 million worth of funding, on two separate hydropower energy projects in Burundi from the dti’s cost-sharing scheme Capital Projects Feasibility Programme. Monitoring and evaluation is not always easy, but has to be done. The Department of Trade and Industry (the dti) needs to do more follow-ups with beneficiaries, said Deputy Minister Elizabeth Thabethe, during a visit toMegatron Federal in Midrand.
Megatron walked away with R10 million worth of funding from the dti’s Capital Projects Feasibility Programme (CPFP) to conduct feasibility studies for the establishment of two hydropower stations in Burundi. CPFP is a costsharing scheme that provides a contribution to the cost of feasibility studies that are likely to lead to projects outside South Africa that will increase local exports and stimulate the market for South African capital goods and services.
Indications are that the projects will be viable (though the studies, which have a target date of end September 2012, are not yet complete), with an estimated value of $150 million. Megatron is planning to expand its production facilities to build the necessary capacity to meet demand.
According to Thabethe, the dti not only supports business but also monitors the progress of the projects it funds and strives for accountability at all times. She said she was happy with the progress Megatron had made.
“What I have seen here today reminded me of the fact that South Africa, and Africa as a whole, has the potential of making a mark in the world. I never thought we would have a company this big manufacturing power products like the ones I saw today. I am happy that the dti’s CPFP funded them.”
During the walkabout at the Megatron buildings, Thabethe was impressed by the fact that women employees were doing the same as what the men were doing, if not more. Four women and one man work in the wiring section, for example. The CEO of Megatron, Mr Ryan Otto, explained that women pay more attention to detail than men. Thabethe joked that men are colour blind, which could be another reason why only one was found to be working in this section.
Mr Donald Mabusela, Director Export Marketing and and Investment Assistance (EMIA), said Megatron was informed about the Manufacturing Competitiveness Enhancement Programme (MCEP) for assistance in expanding its capacity and enhancing its competitiveness.
In line with both the CPFP’s minimum local content requirement and the objective of stimulating upstream and downstream linkages and the development of Small, Medium and Micro Enterprise (SMMEs) and Black Economic Empowerment (BEE) firms, Megatron was encouraged to assist in identifying a number of small and BEE firms that could supply its manufacturing activities and/or sub-contract in the implementation of its energy projects (building and commissioning of the hydropower stations, and all other energy projects).
According to Mabusela, such firms would be assisted to access other schemes such as the Black Business Supplier Development Programme (BBSDP) and the Manufacturing Competitiveness Enhancement Programme (MCEP).
This clustering initiative could be assisted through the MCEP Cluster Competitiveness upgrading component to build and advance South Africa’s capability in the energy (hydropower) sector, hereby positioning the country as a major player in the sector in Africa.
Mrs Susan Mangole, Chief Operation Officer: Incentive Administration in The Enterprise Organisation (TEO), confirmed that the process of establishing new rules for the scheme is at an advanced stage, whereby the CPFP will absorb up to 70% of feasibility study costs, with a threshold of R7.5 million. According to Mrs Mangole, the effectiveness of the CPFP as a tool for industrial and economic development will be enhanced by these positive changes and will play a more practical role in the actualisation of the North-South corridor initiative.
Megatron Federal, a division of Ellies (Pty) Ltd, is an engineering company that offers a wide range of products and services in the field of power generation, transmission, distribution, construction and telecoms. Its key focus is the manufacture of transformers, medium voltage withdrawable and fixed pattern switchgear, diesel generator sets, miniature substations and sheet metal products, and services that include E&I construction, complete outdoor yard solutions and civil building works. All products manufactured and services offered comply with ISO 9001:2008.
According to the CEO, Mr Otto, Megatron is committed to expanding business opportunities into Africa, emphasising energy-related infrastructure and developing the renewable energy market.
”Our emphasis is not only on making profits; it is our social responsibility to address the issues of unemployment in South Africa. Our staff complement is currently sitting on 400, with the majority being youth, and all are permanent staff, excluding the interns who are also in our system,” said Otto with a smile.
He added that Megatron’s empowerment plans include achieving a Broad Based Black Economic Empowerment (B-BBEE) level 4 rating within two years (currently a level 6 rating); recognising the inherent skills and value of women in business; continuing to support training and skills development of PDIs; acknowledging the role of SMEs; and on-going commitment to Enterprise Development initiatives.
Qualified electrician Orica Maaka (34) said she has been with Megatron for four years and is happy in her job. “I don’t like it when men feel pity for me and think that because I am a woman, I cannot perform well. But my male colleagues now respect me and know that I am good at my job.”
Director: East and Central Africa in the International Trade and Economic Development division, Mr Thamsanqa Ngwenya, said he would love to see this kind of project being a flagship on the continent. The project that Megatron is pursuing through Burundi Hydropower is well placed to demonstrate South Africa’s capability in delivering similar projects in other countries, thereby increasing our Africa footprint and ensuring commerce driven development.
“We need more companies like this one, which sees an opportunity and grabs it. Companies that are not risk averse in taking opportunities that Africa presents, and equally not only focusing on profits without social impact, but the development of youth.” Megatron is currently shadowing students from Wits University.
The Capital Projects Feasibility Programme (CPFP)
- Across the globe, emerging and developed economies recognise the potential contribution of capital goods as a strategic sector towards strengthening and fast-tracking the country’s industrial and economic development.
- The South African capital equipment, metal fabrication and transport allied equipment sector has been identified as one of the priority sectors within the Industrial Policy Action Plan (IPAP).
- To promote the exports of capital goods and services, the dti launched the CPFP to absorb 55% of
- Feasibility study costs for capital projects in Africa and 50% for projects outside Africa, to a maximum of R5 million.
The rationale:
- Feasibility studies cost tens of millions of Rands, and there is no guarantee that after spending such amounts of money the results of a study will be positive, thereby confirming that a project will go ahead;
- On the other hand, a Feasibility Study report is a key document that potential funders will need to decide whether to fund a project;
- By absorbing some of the costs, the dti is encouraging/incentivising South African companies to engage in Feasibility Studies;
- Participating early in capital projects will give South African companies an advantage; and
- When projects are finally implemented, South African goods and services will be exported to those countries.
- Since its inception, 30 projects have been assisted though the scheme to the value of R105, 2 million, and the overall total project value of these projects runs into several billions of US Dollars worth of potential exports of South African capital goods and services.
- Megatron’s project is the first energy project supported through the CPFP. Other projects include logistics and industrial parks, sugar and bio fuel, rail road, bulk and waste water supply, and mining.
For more information on the dti schemes, visit: www.thedti.gov.za/financial_assistance/financial_assistance.jsp
