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THE NATIONAL INDUSTRIAL PARTICIPATION PROGRAMME

THE NATIONAL INDUSTRIAL PARTICIPATION PROGRAMME. PRESENTATION TO PORTFOLIO COMMITTTEE ON TRADE AND INDUSTRY October 2005. Background. Became obligatory to all government purchases in September 1996. Obligations monitored in the region of US$15 bn

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THE NATIONAL INDUSTRIAL PARTICIPATION PROGRAMME

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  1. THE NATIONAL INDUSTRIALPARTICIPATION PROGRAMME PRESENTATION TO PORTFOLIO COMMITTTEE ON TRADE AND INDUSTRY October 2005

  2. Background • Became obligatory to all government purchases in September 1996. • Obligations monitored in the region of US$15 bn • Main obligations arise out of purchases from the SDP and SAA. • Other obligations from telecoms, IT transport and energy sectors. 2

  3. Main purpose • To raise investment levels • and to increase international market access for South African value-added goods and services • by leveraging off government procurement. 3

  4. The NIP Obligation • Seven years to fulfill the obligation • Credits system used for monitoring purposes • Performance guarantee required • Responsibility lies solely with seller • Purchasing decision independent of NIP • NIP is a precondition but not a factor in the adjudication process 4

  5. Current Obligations • Total Obligations approx US$15bn • US$13 bn arising out of Strategic Defence Procurement • US$800m arising out of purchases by SAA • Other purchases arising from Telkom, Eskom, Transnet, national and provincial departments 5

  6. New Obligations • Increased activity will result in substantial increase in non-defence obligations • Energy Infrastructure • De-mothballing programme • New power stations • Transport Infrastructure • Gautrain • Spoornet programme • PBMR programme • World Cup 2010 6

  7. Current Obligations • Obligors have seven years to fulfill obligation • BAE/SAAB has 11 due to size (US$7.2bn) • Defence obligors have specific milestones that must be met • First milestones due in 2004 • Second milestones due in 2005 • Next milestones due in 2007 for BAE/SAAB • Finalising April 2005 milestone for Thyssen, Agusta and Thales 7

  8. Aggregate Performance

  9. Aggregate Performance 9

  10. Performance of Obligors • Since inception over 130 projects approved and implemented • Projects in various sectors and different regions • These projects have generated • Investment Credits in excess of US$1bn • Exports and Local Sales Credits of US$2.5bn • Includes technology transfer, BEE and SME promotion • 8 000 direct jobs 10

  11. Performance of defence obligors per milestones • BAE/SAAB in aggregate almost achieved their first milestone target • Achieved more than 100% investment target • 95% overall achievement • Agusta • Exceeded its first milestone targets • Currently at 68% of its second milestone due in 2005 • Thales • Achieved 100% of its investment target • Overall achievement of 93% • Ferrostaal • Expected to achieved 82% of its milestone by end of 2005 • Thyssen • Achieved 65% of its milestone due in April 2005 11

  12. BAE/SAAB Selected Projects • Treacle Fund2 – targeting export based industries • Gold Advance Scheme – to stimulate jewellery manufacturing in South Africa • Carbon Manufacturing – activated carbon for liquid and gas filtration • Belmec High Pressure Die Casting – manufacture of automotive components • Ferrochrome Smelter – new ferrochrome smeltering facilities.

  13. Milestone Performance BAE / SAAB

  14. Thyssen Selected Projects • Ferrochrome Smelter • Aluminium Tubes – manufacture of radiators • Dispack – packaging, plant services, technical and logistics

  15. Milestone Performance Thyssen

  16. Ferrostaal Selected Projects • MAN Turbo Projects – Production of turbine blades • Magwa Tea Estate – Tea plantation in Lusikisiki • Hosaf PET Recycling Plant – Recycling of plastic bottles to produce polyesters • Atlantis Training Centre – training and further qualifications in a range of industrial, technical and other skills • Engineering Services – supply and implementation of industrial plants worldwide

  17. Milestone Performance Ferrostaal

  18. Thales Selected Projects • Blackstone Tek – Production of carbon fibre products • Silicon Smelters and Fume Dioxide – Production of silicon metal and silicon fume dioxide • Tenesa – Manufacturing of solar panels • Evertrade Medical Waste – Facilities for processing and management of waste

  19. Milestone Performance - Thales

  20. Agusta Selected Projects • Filk Gold Chains – Manufacture of gold chains • Cape Mohair – Spinning and dyeing for exports • Mario Levi – Split leather production for motor vehicles

  21. Milestone Performance Agusta

  22. Performance of Non-Defence Obligors • Boeing has fulfilled its obligations three years ahead of schedule • Airbus has achieved 20% of its obligation due in 2013 • 30% achievement if SAA does not go ahead with the purchase of the A320’s • All other non-defence obligors performing satisfactory • Siemens, Alcatel, Alstom and Ericsson with credits above current obligations 22

  23. S I Y A B O N G A ! 23

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