The Department of Trade and Industry (the dti) has noted the recent media reports regarding the designation of Solar Water Heater Components. These reports allege that the formulation of the procurement rules have contributed to "killing the industry" and contributed to job losses.
However, the dti would like to clarify the following factual errors contained in these reports:
- None existence or manufacturing capability of Solar Water Heating (SWH) manufacturers in South Africa
- SWH technology as only evacuated tubes system; and
- Designation of Solar Water Heating (SWH) components at 70% for tank and collector local content requirement for local manufacturing has led to the destruction of SWH industry and job losses.
The correct perspective to the above mentioned errors are:
According to the South African Bureau of Standards (SABS) Local Content Verification, there are a number of companies who have qualified in line with stipulated local content of 70% for tanks and collector, some of whom manufacture evacuated tube type collectors. the dti is also aware that the compliant manufacturers are able to supply when procurement commences. Furthermore, both importers and local manufacturers of Solar Water Heaters (SWH) are free to sell their products into the domestic and export market, subject only to the building and safety standards that apply in South Africa and export destinations.
Temporary exemptions from the local content designation for public sector procurement can be granted where exceptional supply constraints exist. This is the prerogative of the procuring entity, in this case, the Department of Energy (DoE). To date the dti has received no indication from the DoE that such an exemption is necessitated by supply constraints from local manufacturers.
For the public sector procurement, government stipulated a 70% local content threshold requirement for tank and collector, in order to support local manufacturers, with a focus on two key components – tanks and collectors. Government designated the tank and the collector, of any solar water configuration, precisely because the administrative and regulatory burden to prove local content for all the other components in SWH's is high. Thus the designation of these two components in fact relieves manufacturers of the burden of proving local content for a wide variety of small components such as screws, glue, bolts, paint, a wide variety of pumps and other components used in various configurations. Fully imported collectors – evaluated separately would not qualify under government procurement requirements.
the dti designated the tank and the collector, in any configuration, without specifying whether high or low pressure units would qualify or whether collectors should be of the flat plate or evacuated tube type.
The singling out of a low pressure solar water heater evacuated tube system and the exclusion of other configurations reflects a bias to promote or protect a particular section of the market. the dti on the other hand is under obligation to take a broader inclusive view of the economy and ensure that all participants in the market (and by implication all configurations of SWH's) are afforded a fair chance to compete: with a strong focus on local manufacture where public procurement applies.
Lastly, the fact is that importers of Solar Water Heating (SWH) Components imported large quantities in anticipation that government will procure from them once the rollout of SWH programme has commenced.
Enquiries:
Sidwell Medupe
Tel: 012 394 1650
Cell: 079 492 1774
E-mail: MSMedupe@thedti.gov.za
