Inquiry into localisation policy in SOEs to begin
Trade and Industry Minister Rob Davies is also concerned about the lack of adherence by government departments and SOEs to the policy of designation
Parliament’s trade and industry committee is due to launch an inquiry into SA’s localisation policy, and its implementation by public-sector entities and state-owned companies.
The committee believes the policy might not have been implemented effectively.
The form of the inquiry still has to be decided and the terms of reference will be drawn up during the two-week parliamentary recess which begins on Monday, committee chairperson Joan Fubbs said after a committee meeting on Friday.
The committee has been engaging with state-owned entities (SOEs) and companies over the implementation of localisation and was concerned that it was not being implemented. “It is a serious concern and we are trying to get at the bottom of it. We don’t believe we are getting all the facts,” Fubbs said.
She said the committee was not satisfied with Friday’s engagement with Transnet executives and had not been entirely satisfied with other interactions with other SOEs and companies on localisation.
There was a need for more research and more engagement of stakeholders, but the form the inquiry would take would only be agreed on later, Fubbs stressed.
Trade and Industry Minister Rob Davies is also concerned about the lack of adherence by government departments and SOEs to the policy of designation, which has so far identified 20 products that have to be procured locally. Davis is looking towards stricter enforcement of the measure.
Fubbs said the explanation given by Transnet and the Passenger Rail Agency of SA for the low level of localisation was that demand for rolling stock had fallen, due to the economic downturn and the tapering of demand by the private sector.
She suggested that the approach should rather be a supply side one in order to stimulate the economy and questioned why SA was procuring its rolling stock from Chinese manufacturers rather than manufacturing locally.
The DA’s spokesperson on trade and industry Dean Macpherson welcomed the committee’s agreement to hold an inquiry which would also look into the Transnet acquisition of 1,064 locomotives at a cost of R50bn.
He wants the inquiry to investigate the involvement of the Guptas through associate Salem Essa’s Tequesta Group, which received R5.3bn in kickbacks from China South Rail.
A probe would also consider or determine the following:
• Why no measures were in place at Transnet to validate local content provisions in each locomotive.
• Why there were no penalty clauses for failure to meet a 55%-60% target for local content.
• The shareholders of original equipment manufacturers and suppliers related to the Transnet contract.
• The nature of the relationship between Transnet CEO Siyabonga Gama and Essa in relation to these contracts.
• The effect that price inflation by the Guptas had had on the contract, with up to R10m per locomotive added on.
• Why Transnet ignored government instructions to adhere to local content and designation provisions without any consequences.
“We know that SOEs like Transnet have become ground zero for the Guptas to rob and loot SA of its resources. It simply cannot be that Transnet is allowed to get away with protecting one family at the expense of good governance and fighting corruption,” Macpherson said.
“That’s why only a committee inquiry can finally get to the bottom of this mess and finally bring accountability to this incredible theatrical act, which is costing South Africans billions.”