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  • Eskom officially declares Lethabo tower collapse an act of sabotage
    Eskom CEO Andre de Ruyter has confirmed that the collapse of a distribution-line tower providing power to the coal conveyor system at the Lethabo power station, in the Free State, was a “deliberate act of sabotage”.
    The sabotage occurred at about 18:00 on Wednesday November 17 and was implemented in such a way as to ensure that the tower collapsed on to a second distribution line, providing double redundancy to the conveyor system.
    Eight of the H-frame tower’s 24-mm cable stays were deliberately cut either with a hacksaw or an angle grinder, and the tower was also directed to fall uphill so as to deliberately damage the second distribution line.
    Had it not been for the efforts of the utility’s distribution staff to restore power supply to the conveyors via an innovative engineering solution, Lethabo would have shut within six hours of the incident.
    This is significant as Lethabo is Eskom’s best-performing coal plant currently and if its 3 600 MW capacity had been lost on Wednesday night, far more intensive load-shedding would have been declared.
    In fact, De Ruyter said that Stage 6, or 6 000 MW of rotational cuts, would have been necessary on November 17, instead of the Stage 2 that was implemented.
    Eskom is working with the Hawks unit within the South African Police Service to investigate the incident, which occurred in an area that has never before been considered a cable theft hotspot.
    De Ruyter said the fact that nothing was stolen from the site also pointed to sabotage, rather than an economic crime.
    He declined to speculate on the motive, saying only that it was “extremely disappointing” that certain individuals would actively seek to increase the intensity of load-shedding and its negative economic consequences.
    Eskom also refused to comment further on a forensic investigation under way at the Matimba power station, in Limpopo, where three units tripped on November 17 when a team working on the dry-cooling fans at the power station allowed an extension cord to drop on to the transformer at Unit 2.
    This resulted in a flash that tripped the station board, shutting off cooling to Units 1, 2 and 3, causing the three units to shut down.
    De Ruyter said previously that he had difficulty believing that the incident was entirely coincidental.
    The utility would beef up its security in and around its power stations in light of the incidents, but would not be drawn on the type of actions it was taking or how much it would spend on the security effort.
    De Ruyter did indicate, however, that infrared drone technology was being deployed along with intelligent camera solutions, while new private security companies were also being employed at various power stations.
    Asked whether sabotage could trigger the blackout that Eskom had been assuring the public was not likely, given the deployment of load-shedding to safeguard against such an event, De Ruyter said he did not want to create undue alarm.
    “[But] can we cope with any concerted attack, and I think it’s appropriate to use that word, on a number of key elements of our system simultaneously, I don’t think that is a scenario that we want to contemplate.
    “We have mechanisms in place to avoid a total blackout, load-shedding being the primary mechanism we use but, of course, we can only lose so much capacity.”
    He said that the Lethabo incident had highlighted the utility’s vulnerability, particularly given its extensive transmission network, involving more than 390 000-km of lines.
    Besides Eskom’s internal security efforts, there was thus also a need for the State security and law enforcement agencies to play a direct role in identifying the threat, as well as the culprits, and in ensuring that they were apprehended and prosecuted.
    4 min
  • Eskom not holding up RMIPPPP projects, De Ruyter insists
    Eskom CEO Andre de Ruyter has denied that the utility is delaying the introduction of new electricity capacity procured under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), as suggested by Minerals Resources and Energy Minister Gwede Mantashe in a recent television interview.
    Speaking to Newzroom Afrika this week, Mantashe said that Eskom was “toing and froing” on the 11 RMIPPPP projects, including three powership projects, which was contributing to the delay in the introduction of 1 995 MW of new capacity.
    Without offering specifics, Mantashe said that Eskom had raised various problems with the RMIPPPP projects, saying “they don’t want this, they don’t want that”.
    The Minister also dismissed suggestions that no new capacity was being added, noting that besides the RMIPPPP projects another 2 600 MW was being procured following the most recent renewables procurement round, known as Bid Window 5.
    He made no mention of the fact that government had decided to delay the deadline for the financial close of the RMIPPPP projects to the end of January.
    Mantashe also questioned whether De Ruyter understood the energy industry if he did not accept that there would be a time lag before new capacity could be introduced to cater for financial close and construction.
    The Eskom CEO insisted that the utility was not the cause of the delay in the conclusion of the RMIPPPP contracts.
    He noted that Eskom had not yet received final documentation from the IPP Office, including the power purchase agreement.
    “It’s a bit difficult to sign an agreement when you don’t know what the agreement looks like,” De Ruyter said.
    Eskom was also concerned that the maximum price methodology for gas had not been addressed between the National Energy Regulator of South Africa, the IPP Office and the Department of Mineral Resources and Energy, with outstanding matters relating to indexation being central to the final commercial arrangements.
    “We would be, I think, remiss in fulfilling our fiduciary duties towards Eskom as a legal entity if we were to enter into agreements without knowing what the key commercial terms are that we are signing up for.
    “This is, therefore, not something that we are resisting, but we do have to have all the facts on the table,” De Ruyter said.
    There had been ongoing engagements with the IPP Office to address the outstanding issues, but these had not yet been resolved.
    Litigation related to the powership contracts, which also had not yet received environmental authorisation, also made it “difficult for Eskom as the designated single buyer to sign an agreement that we have not yet seen”.
    On the 25 renewables projects identified as preferred bidders in late October, Eskom was proceeding with its governance processes, which should be concluded by March 2022, which is in line with the timeframe outlined by the IPP Office for Eskom to complete its internal review.
    “We are trying to expedite this, and I have repeatedly welcomed the capacity that will be created by the bid window five projects.
    “We have absolutely no interest in delaying new capacity from coming onto the grid, obviously [with the proviso] that these are on commercial terms that we can justify, as I don’t have any particular desire to be designated a delinquent director by agreeing to a contract that we haven’t seen and where the commercial terms are not fully understood.”
    4 min
  • Eskom, load-shedding in the headlines
    Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about load-shedding continuing to present a danger, how the leadership of Eskom is handling the intense pressure it is facing, whether the policy and regulatory environment is supportive of a speedy resolution to the current crisis and the renewed focus on the 4 000 MW to 6 000 MW supply gap.
    14 min
  • Eskom beefs up security after suspicious incidents at Matimba and Lethabo
    Eskom CEO Andre de Ruyter reports that overt and covert security is being beefed up in and around the utility’s power stations following suspicious incidents at Matimba and Lethabo on November 17 that are suspected to have not been “entirely coincidental”.
    In a briefing on the state of the system, which descended into load-shedding again on Wednesday, De Ruyter emphasised that he was typically wary of attributing to “malice what could be explained by incompetence”.
    Nevertheless, he confirmed that the tripping of three units at the Matimba power station had become the subject of a forensic investigation.
    The breakdown occurred when a team working on the dry-cooling fans at the power station allowed an extension cord to drop on to the transformer at Unit 2. This resulted in a flash that tripped the station board, shutting off cooling to Units 1, 2 and 3, and causing the three units to shut down.
    “We have difficulty believing that this is entirely coincidental,” De Ruyter said.
    A forensic team had been sent to the site to investigate and additional security would be deployed to Matimba.
    “We have no hard evidence of sabotage at this point in time,” he stressed, but added that the incident had “certainly aroused suspicion”.
    Likewise, Eskom was investigating an incident at the Lethabo power station, where one of the distribution-line towers collapsed in such a way as to damage a second line, which was in place to provide power redundancy to the coal conveyor system at the station.
    The incident, which made both lines inoperable, occurred at about 18:00 on November 17, ahead of evening peak, and Eskom was investigating the incident, which would have led to a shutdown of the station within six hours, had an innovative engineering solution not been found.
    It was also closing in, with the help of the police, on a “network” of coal transporters that had been tampering with seals used to hold tarpaulins in place over the coal during transport.
    Eskom believes the network is skimming coal and replacing it with material that is damaging power stations mills and boiler tubes.
    The tarpaulins and seals were introduced to safeguard the integrity of coal in transport from the mines to the power stations so as to prevent any coal theft and the introduction of incombustible material or rocks, which are known causes of boiler-tube leaks.
    One transporter was recently found to have 60 broken seals in the cab of a truck, suggesting ongoing theft of coal.
    Despite these incidents, the level of unplanned losses had been reduced from over 15 000 MW on Wednesday to below 14 000 MW.
    This reduction together with relatively low levels of planned maintenance of 3 910 MW means that Eskom is expecting to lift Stage 2 load-shedding at 21:00 on November 18, and reintroduce rotational cuts at Stage 1, from 5:00 until 21:00 on Friday.
    It does not expect to reinstate load-shedding over the weekend.
    De Ruyter said that planned maintenance was continuing in line with its programme, but acknowledged that it was lower than initially hoped, owing to ongoing liquidity constraints.
    These constraints meant that it could not secure the spares it required ahead of time to carry out maintenance at higher levels.
    4 min
  • Final industrial masterplan for renewables expected by March
    The South African Renewable Energy Masterplan (SAREM) is expected to be finalised for adoption before the end of March, following which it will become the country’s implementation plan for the industrialisation of the renewables value chain.
    Work is still under way to achieve consensus between labour, business, civil society and government on what the priority actions should be and a complete first draft of the document should be released early next year.
    The plan is premised mainly on the allocations for solar photovoltaic (PV), wind and battery storage in the Integrated Resource Plan of 2019 (IRP2019) but will also take account of potential demand arising from the recent reform allowing distributed generation plants below 100 MW in size to be built in the absence of a licence, even if they wheel electricity over the grid and sell to third parties.
    Although the IRP2019 allocations are considered conservative owing to changes in technology costs and limitations on yearly deployments, it nevertheless envisages a significant scale-up in renewables capacity and storage by 2030.
    The plan, which itself could be reviewed in 2022, allocates 14 400 MW to wind, 6 400 MW to solar PV and 2 000 MW to storage between 2020 and 2030 and also caters for at least 4 000 MW of distributed generation.
    Initial calculations made as part of the SAREM process indicate implementing the IRP2019 would require more than 14-million solar panels and 3 600 wind turbines, with a cumulative investment value of R395-billion.
    Department of Minerals Resource and Energy director for renewable energy Nomawethu Qase reports that, through SAREM, stakeholders have agreed to identify opportunities to develop industrial capacity around that investment plan.
    The Department of Trade, Industry and Competition’s Gerhard Fourie adds that the masterplan will seek to ensure that there is a public-private compact to support “optimal industrialisation” based on a value-chain analysis.
    An analysis of the components and materials used in the manufacture and assembly of solar PV and wind farms already points to several “low-hanging fruits”.
    These range from cement and steel used in wind turbines, through to modules and inverters used to develop a solar PV system.
    Green Cape special adviser Francis Jackson, who is facilitating the SAREM drafting process, reports that stakeholders have broadly agreed to a vision for the industrialisation of the renewable value chain. This vision includes the expansion of industrial capacity, the creation of jobs, growing the economy, building a transformed industry and contributing to the country’s just energy transition.
    There has also been agreement on some of the enablers of large-scale industrialisation, with the key initial enabler seen as being the rebuilding of investor confidence, which was undermined after the renewables procurement programme stalled in 2015.
    When it resumed earlier this year, some of the manufacturing and assembly capacity developed between 2011 and 2015 had been lost.
    The consequence is the current “stand-off” between suppliers waiting on orders before making new investments and renewables bidders holding back from placing firm orders until they are satisfied that the capacity is in place to deliver.
    “Relying on designations pits players in an irreconcilable game around timing and exemptions,” Jackson explains.
    During the most recent two bidding rounds hosted by government, certain components had been designated for local procurement, which led several bidders to seek exemption from the designations on the basis that the capacity was not yet in place.
    “It is proposed that a weighted mechanism, such as a local points system, would favour establishing capacity that leverages local strength to the best effect and tracks international evolution and innovations,” Jackson adds.
    The Congress of South African Unions’ (Cosatu’s) Tony Ehrenreich indicates that labour’s support for industrialisation in the sector is premised on t...
    6 min
  • TNPA goes back to basics with new operational model
    o create a transformed and sustainable world-class ports system, Transnet National Ports Authority (TNPA) has launched its new operational model (OM) structure so that it may “stimulate a transformed maritime economy through adaptable infrastructure that is fit-for-purpose”.
    The new OM seeks to “reposition South Africa in the global market and ensure growth and sustainability”. It also seeks to address customer needs, while facilitating trade on the African continent.
    As part of the new OM, TNPA has reimagined its executive structure and will be placing 13 GMs to manage various aspects of the business. Nine of these have been appointed thus far, with the remaining four positions to be filled by March 31.
    TNPA will now have a GM responsible for supply chain management, a responsibility previously allocated to the CFO, as well as three managing executives for the Eastern, Central and Western regions. Moshe Motlohi, Siyabulela Mhlaluka and advocate Phyllis Motšatši Difeto have been appointed to head up these three regions.
    “Instead of having one CEO, we are now going to have three individuals who are seated at the ports and [who will be] able to strategically give guidance and support the port in doing what they are mandated to do in that region,” TNPA said during a virtual briefing on November 17.
    In addition, the new OM also includes six focus areas that are receiving priority attention. These are improving terminal oversight; addressing backlogs and chronic historical underspending on capital infrastructure and maintenance; addressing port property vacancies; empowering its people; implementing a simplified and compliant supply chain management framework and introducing effective and efficient automated systems.
    Further, with a changing global economy, increased competition on the African continent and crippling unemployment figures in the country, TNPA said it had “conducted some introspection” which led to an urgent review of its operations and identified various challenges.
    These included rising customer dissatisfaction, declining port efficiency performance and volumes, inefficiencies and high costs of doing business, a failure to delivery capital projects on time, ageing fleet and infrastructure, and bureaucratic internal processes.
    “We are going back to basics and moving closer to our customers and our people,” said TNPA corporate affairs and external relations executive manager Ayanda Mantshongo.
    She added that, through the new OM, the reimagined TNPA will be “better positioned to deliver on its mandate to provide efficient and affordable ports that grow the economy”.
    TNPA is aiming to ensure that customers will benefit from improved efficiencies and a lower cost of doing business, which it said would be achieved through simplified supply chain processes to deliver critical infrastructure and equipment that will capacitate service delivery.
    The reimagined TNPA will also advance South Africa’s competitiveness in the global market and ensure growth and sustainability.
    4 min
  • Another round of load-shedding declared for this week
    Eskom has confirmed that Stage 2 load-shedding will be implemented from 14:00 on Wednesday November 17, until 5:00 on Saturday November 20.
    CEO Andre de Ruyter announced the latest round of load-shedding at the tail-end of a briefing initially called to warn of possible rotational power cuts, owing to a surge in unplanned outages to 14 444 MW, while planned maintenance was being performed on units with a combined capacity of 4 100 MW.
    During the meeting, several other outages emerged, raising unplanned breakdowns 15 485 MW, and causing the system operator to conclude that there was insufficient generation capacity to proceed in the absence of Stage 2 (2 000 MW) of load-shedding.
    "Regretfully, due to the ongoing insufficient generation capacity and the loss of a unit each at Medupi, Duvha and Kendal power stations this morning, Stage 2 load-shedding will be implemented from 14:00 today until 05:00 on Saturday 20 November.
    "This is to preserve the remaining emergency reserves at the open-cycle gas turbine and pump storage power stations in order to prevent higher stages of load-shedding," Eskom said in a subsequent statement
    Of the five units that failed on November 16, a unit each at Majuba, Kriel and Matimba power stations had been returned to service while the remaining two units were undergoing boiler-tube leak repairs.
    De Ruyter, who announced load-shedding ahead of an appearance before the Parliamentary Portfolio Committee on Pubic Enterprises, said the decision to transition from warning of possible cuts to an announcement of yet more load-shedding indicated how finely balanced the system was.
    He said it would remain so until between 4 000 MW and 6 000 MW of new capacity was added to the grid, which would allow Eskom the time and space it required to carry out proper maintenance on its aged coal fleet.
    Responding to a question on Finance Minister Enoch Godongwana's assertion that De Ruyter was the first CEO to be given the leeway to conduct maintenance, De Ruyter said: "The statement that's being made that I'm being afforded space for maintenance that previously wasn't afforded to some of my predecessors is actually quite an interesting one. It suggests that there was a deliberate decision, which may or may not be correct, to defer maintenance under the leadership of my predecessors and, of course, that just exacerbates the current challenges that we are facing."
    De Ruyter stressed, however, that Eskom's relationship with the National Treasury was "constructive", even though there had been delays in allowing the utility scope to deviate from the Public Finance Management Act (PFMA) in order to improve the quality of its procurement.
    Eskom has indicated the application of the PFMA had led it to contract with suppliers that delivered the cheapest quote, but not the best maintenance services.
    "For example, [we are not allowed] to use an Eskom wholly owned subsidiary called ERI Rotek without testing the market.
    "This slows us down very significantly and we have approached the National Treasury for a request for an exemption in this regard; that request was submitted on the 24th of June of this year and, as I speak here, no response to that has been received.
    "That does have an impact on our ability to deploy resources to site, to carry out much-needed maintenance.
    "That is our major challenge, which is on the administration of the PFMA, while emphasising that we respect the need to have good governance applicable to dealing with public funds, but we also need to have expeditious resolution to requests that we put to the National Treasury."
    4 min
  • Not a ‘finance COP’, but ‘solid work programme’ in place for defining new climate-finance goal
    Forestry, Fisheries and the Environment Minister Barbara Creecy says that, although COP26 was not the ‘finance COP’ hoped for ahead of the Glasgow meeting, it nevertheless did yield “a good, solid work programme” for defining the post-2025 finance goal and for ensuring that the prevailing $100-billion climate finance commitment is in fact implemented.
    Ahead of the gathering, South Africa prioritised the securing of an ambitious finance goal and had even suggested that the figure pledged by developed countries to developing countries be progressively increased to $750-billion by 2030.
    No new goal was announced at COP26, although it was agreed that there would be more stringent monitoring of the $100-billion-a-year climate commitment to developing countries – a pledge that has not been honoured as initially advertised.
    Nevertheless, Creecy told Engineering News in an interview there had been a “sea change” in the attitude of developed countries towards the issue of climate finance.
    This change was reflected in a new openness on both the scale of the funding required and the mix of such financing, between grants and concessional loans.
    Grant financing is seen as particularly important for adaptation projects, such as storm-proofing of schools and clinics, which are unlikely to have the revenue streams that some mitigation investments, such as renewable-energy plants, may enjoy, enabling them to pay back loans.
    In addition, Creecy reported a new willingness to allow middle-income countries, such as South Africa, to become eligible for grant financing.
    “We were not expecting a figure on long-term financing, but we pushed for a proper process and we’ve got that,” Creecy told Engineering News.
    South Africa was also pleased that a two-year work programme had been agreed to operationalise the Global Goal on Adaptation.
    Creecy expressed optimism that Egypt, which would host COP27 in Sharm el-Sheikh in November 2022, would prioritise the issues of finance and adaptation given the importance of both issues to Africa.
    Responding to criticism that COP26 had failed to live up to expectations, Creecy said “it depends how you judge it”.
    From South Africa’s perspective, which had “fought for more than two years” for work programmes on adaptation and the long-term finance goals, the Glasgow package outcome struck the right balance to accommodate the different national circumstances and capacities amongst nearly 200 parties.
    “For the first time the Governing Bodies of the Convention and the Paris Agreement have agreed to the importance of supporting developing countries in financing just transition elements of their climate actions, and to support the implementation of just transitions that promote sustainable development and the eradication of poverty, the creation of decent work and quality jobs.”
    In addition, there had been resolution of Article 6, relating to carbon markets, which while “not perfect”, included measures to avoid double counting and ensure environmental integrity.
    “I suppose those who wanted to see more dramatic statements on mitigation would be underwhelmed.
    “But I think a considered reflection on gains that developing countries have made would indicate that they are not insubstantial.”
    Creecy would now provide a report back to Cabinet and seek to secure a mandate for South Africa’s approach to the work programmes.
    In parallel, a high-level finance team would be set up to “interrogate” the $8.5-billion just transition finance offer made by Germany, France, the US, the UK and the European Union on the sidelines of COP26.
    “We want to understand exactly what is available here in terms of the mix between concessional loans and grant financing.
    “That team will include the National Treasury, who will be looking at what regulatory environment could allow us to utilise this money and, obviously, that regulatory environment would have to look at existing debt levels.”
    Given that part of the funding would be used to support Eskom’s j...
    5 min
  • Earth & Wire unveils R500bn plan for 20 GW renewables fleet by 2035
    Emerging South African energy group Earth & Wire, which aims to sell electricity directly to private customers, is positioning itself to build a 20 GW portfolio of grid-connected wind and solar projects by 2035 at an estimated cost of R500-billion.
    Business development head Thomas Garner, who is also chairperson of the South African Independent Power Producers Association, reports that the company has secured over 400 000 ha of signed agreements with landowners on properties with sufficient solar and wind resources to meet the company’s target of supplying 30% of South Africa’s new electricity capacity by 2035.
    The initial focus, however, is on a 2 GW portfolio of late-stage wind and solar projects, with grid connections, which Earth & Wire expects to implement in the coming four years.
    The projects, which are located within proximity to existing grid capacity, are located in the Eastern Cape, Gauteng and Mpumalanga regions.
    “Importantly, the projects in Mpumalanga are ideally located for us to make a meaningful impact on the transition from coal to renewable power,” Garner says, indicating that the projects could help create thousands of jobs and support the just transition.
    He argues that Earth & Wire’s project deployment (as well as those of other IPPs seeking to sell to private offtakers) could be immediately accelerated if the regulatory environment catered for projects proceeding in the absence of power purchase agreements (PPAs).
    A recent reform enables distributed generators to build facilities of up to 100 MW in size without a licence, as well as to sell to multiple third parties and to wheel electricity over municipal and Eskom networks. However, the National Energy Regulator of South Africa still requires such projects to submit signed PPAs as part of a compulsory registration process.
    Should this registration requirement be eliminated, Garner believes that between 5 GW and 10 GW of new IPP capacity could be built in the coming two years and begin supplying private consumers that are not keen to enter into multidecade PPAs.
    Given Eskom’s current estimate that South Africa has a supply deficit of between 4 GW and 6 GW, an accelerated build-out of a new IPP capacity base on a merchant-market model could help ease current supply constraints and materially reduce the risk of load-shedding.
    WaterBorne Capital’s Brett Levick, who is supporting Earth & Wire’s fundraising efforts, says discussions are under way with international funders and investors to secure the finance needed for the company’s R500-billion investment plan.
    “This is a large number by any means, but certainly not out of reach, given the extent of the impressive Earth & Wire portfolio, their land assets secured for development, and the quantum of renewable power urgently required by the South African energy market,” Levick avers.
    Head of brand strategy Bruce Paynter says the company will be making several announcements in the coming weeks, which will point to the prospect of South Africans having the “choice to buy reliable and affordable, clean electricity, from Earth & Wire, by 2025”.
    4 min
  • Report warns that industrialisation-through-localisation could stunt South Africa’s development
    The Centre for Development and Enterprise (CDE) has published a hard-hitting critique of South Africa’s localisation policy, warning that it could raise the cost of doing business, reduce export competitiveness and constrain future development.
    Titled ‘The Siren Song of Localisation: Why localisation policy will not lead to industrialisation’, the CDE report includes input from Professor Lawrence Edwards and Professor Emeritus David Kaplan, both of the University of Cape Town’s School of Economics.
    It argues that the localisation strategy, which has been included as one of the components of government’s Economic Reconstruction and Recovery Plan, runs counter to President Cyril Ramaphosa’s goals of reducing the cost of doing business, improving the investment climate, opening the economy to new entrants and using infrastructure to stimulate growth.
    Trade, Industry and Competition Minister Ebrahim Patel has requested the social partners at the National Economic Development and Labour Council (Nedlac) to consider an import-substitution target of 20% for non-petroleum imports, which he argues could drive progressive localisation worth up to R200-billion over the coming five years.
    The so-called Nedlac accord is premised on an analysis showing that South Africa’s import to gross domestic product (GDP) ratio was too high, with R1.1-trillion in non-oil imports yearly ahead of the Covid-19 pandemic.
    “We import goods worth 25% of our GDP – our propensity to import is out of line with peer countries and developed economies and more can sensibly and sustainably be produced locally. Compare our 25% with China at 14%, India at 16%, Brazil 10%, the US at 12% and the EU at 14%,” the Minister has argued.
    Organised business has responded cautiously to the call but has not criticised it as unworkable or impractical. Instead, it has urged government to implement an evidence-based localisation policy that is supportive of employment creation and increased economic competitiveness.
    One of the key instruments being deployed by government to facilitate industrialisation-through-localisation has been the designation of products for local procurement by organs of State, including State-owned enterprises.
    Twenty-seven products, ranging from rail rolling stock and power pylons to solar components, have already been designated and there are plans to expand the list to 42 products in the not-too-distant future. Most recently, locally made cement was designated for the upcoming infrastructure roll-out.
    CDE executive director Ann Bernstein, who presented the report’s highlights during a virtual launch, pointed to analysis showing that South Africa did not have an “over propensity” to import.
    The country’s imports and exports as a ratio of GDP, she said, were similar to a large number of countries.
    Imports were also critical not only for development but also to support innovation and exports, owing to integrated global supply chains and the need for imported capital goods to support the export of manufactured products.
    “Localisation is, thus, an anti-export strategy,” Bernstein asserted, adding that few countries had developed in the absence of export-led growth.
    Kaplan acknowledged that the issue was a complex one, as localisation could support industrialisation in certain specific circumstances.
    However, if South Africa were to use localisation to support industrialisation, Kaplan argued that it should be designed primarily to enhance efficiencies over a specific time horizon and deployed with full transparency of the costs and benefits, as well as with a commitment to ongoing external evaluation.
    Edwards argued that, in many cases, product designations would prove to be too blunt an instrument to support the development of competitive industrial capacity.
    He also underlined the strong relationship between imports and exports, noting that research showing that the most successful exporters, including South Africa automotive manufacturers, were also the ...
    6 min

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