Talks to shield carmakers from power cuts
The government is in talks with the vehicle industry to probe ways in which it can be protected from load-shedding, trade, industry & competition minister Ebrahim Patel says.
At a media briefing on Wednesday ahead of his budget vote speech, Patel announced the gazetting of the block exemptions from sections of the Competition Act of energy suppliers and energy users to allow them to collaborate to overcome electricity supply constraints and to share facilities.
Also gazetted were regulations under the Companies Act dealing with the declaration of beneficial ownership to meet the requirements of the Financial Action Task Force, which grey listed SA earlier this year, and compulsory specifications for energy-efficient LED globes.
Patel noted the importance of the vehicle industry, which contributes about 4.5% of GDP on a gross basis as well as to exports. He would not disclose the possible ways in which the industry could be spared from the loadshedding crisis but said the impact of load-shedding on an important industry was “significant” and had been discussed within government.
“We have now elevated the challenges that the sector faces to a joint discussion between a number of portfolios in government and have been engaging with the industry,” Patel said, adding that electricity minister Kgosientsho Ramokgopa had met players in the sector and he had met a number of CEOs.
“What an auto plant needs is certainty of its energy supply and what it needs is full utilisation of its plant. When you work at three-quarter level or two-thirds level you lose the economies of scale and the pricing advantage that it brings. That of course makes SA vehicles less competitive.”
ROAD MAP
On government’s policy on electric vehicles, Patel said if the local car industry was to grow there should be a clear, longterm road map for it.
An announcement would be made as soon as discussions between his department and National Treasury on the financial implications of an electric vehicle support package had been finalised. “We are confident that we are close to completing that road map,” the minister said in his budget vote speech.
The road map for electric vehicles had to be concluded this year to inform the investment decisions of car manufacturers, he said.
“There is advantage for SA in moving quickly, [so that] we can at a much earlier point secure orders by the original equipment manufacturers and that requires them in turn to make changes to their production floors.”
An initiative would also be launched to identify opportunities for battery production in SA. The country would work with several others on battery production value chains.
Questioned about the African Growth and Opportunity Act (Agoa), which allows preferential access for some SA products into the US market, Patel said he shared the concerns of finance minister Enoch Godongwana on the possible termination of SA’s access to the programme, which expires in 2025. The exclusion of SA from the programme has been suggested as a possibility due to SA’s relationship with Russia in the context of its war against Ukraine and the uproar about the activities surrounding the Russian ship Lady R.
“I do share those concerns. A significant part of SA’s exports to the US is under Agoa. We should do everything possible to retain that. It strengthens the position of SA exporters in the US market, and that helps to create more jobs locally.”
He and Godongwana were working together to address the issues, Patel said. “We value our relationship with the US enormously and will be working closely with the US administration in making the case why SA should remain in Agoa.” Patel said he had met the US administration in December and presented Africa’s case for an early extension of Agoa.
In his speech, Patel outlined the targets the department has set, including the mobilisation of investments of R400bn, additional local production of R40bn and exports of manufactured products of R800bn.
Another target is to add at least 20,000 workers to be included in worker ownership schemes in the companies for which they work. He said the Companies Amendment Bill, which deals with the disclosure by companies of wage differentials, would be finalised by the cabinet within three months.