Parliament to probe why departments aren’t procuring local goods

Parliament's trade and industry committee has decided to launch a parliamentary inquiry into the policy of localisation and its implementation by public sector entities and state owned companies because it believes that 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 chairwoman Joan Fubbs said after a committee meeting on Friday.

The committee has been in discussions with state-owned entities and companies over the implementation of localisation and is concerned that it is 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 meeting with Transnet executives and had not been entirely satisfied after discussions with other state-owned entities and companies on localisation. There was a need for more research and discussion with stakeholders‚ but the form the inquiry would take would be agreed on later.

Trade and Industry Minister Rob Davies is also concerned about the lack of adherence by government departments and state-owned entities to the policy of designation‚ which has so far designated 20 products to be procured locally. He wants 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 because of the economic downturn and the tapering off of demand from the private sector. She suggested that the approach should rather be a supply side one to stimulate the economy. She questioned why South Africa was procuring its rolling stock from Chinese manufacturers rather than locally.

The Democratic Alliance spokesman on trade and industry‚ Dean Macpherson‚ welcomed the committee agreement to hold an inquiry‚ which would also look into the Transnet acquisition of 1,064 locomotives at a cost of R50-billion.

He wants the inquiry to investigate:

• The involvement of the Gupta’s through associate Salem Essa’s Tequesta Group‚ which received R5.3-billion in kickbacks from China South Rail;

• 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;

• To determine the shareholders of original equipment manufacturers (OEM’s) and suppliers related to the Transnet contract;

• The nature of the relationship between Transnet chief executive Siyabonga Gama and Essa in relation to these contracts;

• The effect the price inflation by the Gupta’s had had on the contract‚ with up to R10-million per locomotive added on; and

• Why Transnet ignored department instructions to adhere to local content and designation provisions without any consequences.

– BusinessLIVE