South African Space Agency Bill: SunSpace submission & adoption

Meeting report

Mr Tolo said that the Committee would hear a submission from SunSpace before finalizing the South African National Space Bill. He noted that Sunspace had also presented their submission to the National Assembly and to the Department, and that the latter had in fact responded. It was necessary to hear the submission in the Select Committee in order to ensure an independent decision on the matter.

SunSpace submission
Mr Ron Olivier, Director, said that he would speak on behalf of their board of directors. He apologized for the absence of Mr Themba Vilakazi, their Executive Chairman, as he had received notice of the meeting only the day before and was unable to attend. 

Mr Olivier said their concern was that the Bill was not clearly defining whether the Space Agency would be an implementing agency as opposed to a coordinating agency. The first would place them in a position to own companies and make judgement on strategies. They requested that the agency fulfil purely a coordinating role, by interpreting space strategies and defining missions in accordance with those. It would be unreasonable for the agency to be capacitated to own companies, as this would imply that the agency became an active role player rather than coordinator in the industry. It was therefore desirable to excise subsections 5(2)(c)(i) and (ii) from the Bill. The very nature of the agency would be affected by the inclusion of these provisions in changing its role in the space industry in South Africa.

Mr Olivier hastened to add that the Bill was otherwise fully supported and welcomed by SunSpace. It remained a realistic fear, in view of human behaviour, that if the proposed subsections remained a part of the Bill, this would lead to possible unfair practices by the agency. The Technical Innovation Agency (TIA) could fulfil the same functions as the Space Agency, in that it would be empowered to provide financial and other assistance to any person, for the purpose of enabling that person to develop a technical innovation, to establish a company, to acquire any interest in any person undertaking the development or exploitation of any technological innovation supported by the Agency and various other capacities.

Discussion
Mr M Sulliman (ANC, Northern Cape) asked for more elaboration on a statement in the submission by SunSpace that claimed SunSapce had been marginalised by the DST for the purpose of bringing the company to its knees financially.

Ms F Mazibuko (ANC) asked that SunSpace provide evidence of this claim. She said a free market system prevailed in South Africa and that anyone was at liberty to operate a business. Should there be reasonable evidence to the contrary, Sunspace could take their issue to the Competition Board. It seemed they feared the unknown.

Mr T Setona (ANC, Free State) said the argument was ideological. One could not transform a state and build a strong developmental state without considering the public interest or the good of the people. He asked for any legal evidence of unfair competition. A developmental state could not allow monopolies.

Ms Madlana-Magubane (ANC, Gauteng) asked how SunSpace could claim in their submission that they had not been given the chance to air their concerns or that a fundamental part of democratic process had not been adhered to and asked for elaboration on this.

Ms Masilo asked for more information on what SunSpace actually did.

Mr Olivier agreed that monopoly was certainly not desirable and that competition should always be encouraged, except perhaps in the case where the competition would be between a state-owned monopoly and a small private company like theirs. Monopolies were institutions like Telkom and Eskom, certainly not their company of 70 employees. He challenged the implication that this was a case of a monopoly trying to protect its turf. Competition was fair among equals, He said it was not up to SunSpace to prove a negative somewhere in the future, whereas the department could not seem to motivate why they required these two subsections, if not to use them somewhere in the future.

Mr Olivier explained Sunspace was a small satellite manufacturing and design company, based in Stellenbosch, which had flowed from a previous programme, Sunsat, and which had been university driven, together with assistance form the state and industry. They had small satellite capacity in South Africa, of which SunSat had been the first satellite to be produced in 1999. This satellite had flown from February 1999 until January 2001. It was initially surmised that there had been a fault in the power system, but it had been recently established that the satellite had been hit by American debris, which had caused it to stop functioning properly. Subsequently they had ended up working with Copius, which consisted of a group of member countries in a space programme, to build a similar satellite in collaboration with these companies. The university could not take on a private contract to make this satellite, so SunSpace was formed to build and launch the satellite. This meant the company started out as a single project company sponsored by a certain gentleman. The company realized the possibility of using their skills for South Africa’s developmental needs. They broadened their personnel and scope with the profits of this programme, which they ploughed back into research and development. They lobbied the South African government and the DST to find a programme to use their skills. They managed to acquire a project, which was co-sponsored by the Belgian government. The CSIR were involved but then decided to pull out of the project, which left SunSpace to make up R5 million shortfall. The project had been completed with a technology demonstration taking place on 5 May 2007 to the South African government. The DST only have a certain budget and commissioned the third satellite called Sumbandila, which was built and is awaiting a launch opportunity and is standing at Grabouw. SunSpace has 71 or 90 people in their company, together with 50 other contractors. The development of black engineers took place in a programme supported by the CSIR and the Department of Communications. The company was one that designed and manufactured satellites for earth observation from space. They had had some Issues with BEE, which had been resolved. BEE people had signed a settlement agreement with Sunspace and another was in process. The company had shareholders which consisted of the Dusty Moon consortium and various other shareholders. Their CEO was Ms Xoliswa Kakana who was studying overseas, but who was still very much involved with the running of the company.

Mr Olivier raised the question of democratic process. He said the Chairperson had been correct in pointing out that they had had a chance to present their submission to the National Assembly, and that they had received a response from the DST regarding subsections (5)(2)(c)(i) and (ii). They had simply responded by writing that these powers were necessary to enable them to function fully and effectively. This was a bland statement. The onus was on the DST to prove they needed those clauses to function in a way which was in support of the TIA.

Mr Olivier said this was round two of a democratic process and that this was not yet the time to withdraw from this process. Their company was small but the only one in the country that manufactured satellites. They were involved in another project called the Rapideye constellation, which was being sponsored by the Bavarian government. This would supply a once off product. This project actually required the construction of sixty-six satellites, which would cover the entire globe at any time. The budget for this project was beyond the scale of the DST. The company was desperate to retain engineering expertise within South Africa. They still had a white-heavy heritage. The new university graduates did not have the necessary expertise to know the five very specialized areas involved in satellites, which dealt with a control system to keep the satellite stable in orbit when taking images and sending them to the earth. The power and battery system was also unique, designed with extreme accuracy, as it could not be replaced easily once the satellite was in orbit. It had to last a very long time, sometimes as long as five to ten years.  Imaging on low earth orbit was their main function. The state should not try to reinvent the wheel in this regard. They were far ahead of other African countries like Egypt, Nigeria and Algeria, who had all purchased their satellites outside of Africa. He appealed to members to keep South Africa’s thought leadership on this continent, to get the right demographic makeup as soon as possible. They were not afraid of competition.

Mr Setona said he still required legal evidence. A state that did not regulate affairs of business and which did not intervene was a neo-liberal state. He suggested that the Department be given a chance to explain in order to ally their fears.

Mr Tolo asked that parliamentary law advisors shed some light on the legality of the subsections in question, in order to establish whether these provisions would stand the test of time.

Mr Daniel Moagi, Senior Manager: DST, referred to Clause 4(b) of the Bill which read that the Agency sought “to support the creation of an environment conducive to industrial development in space technology”. Clause 5 had to be read in the context of this previous clause. He also referred to Clause 17 on funding for the Agency, which showed that the Agency was clearly not in the business of making profit. It would need the power to intervene where necessary. The DST was not able to buy equity into SunSpace, as the Public Finance Management Act (PFMA) did not allow this. He said the CSIR had been opposed to doing a due diligence as part of a process to buy equity, because of the risk associated as the company was not considered financially stable.  He was baffled by the statement by SunSpace claiming they were being marginalized as they had received two contracts of R25 million and a further R20 million within a three year period.  The Sumbandila satellite was waiting to be launched and was due for launching on 25 December. There was a legal dispute pending over the South African Multi-Sensor Microsatellite Imager (MSMI) contract which had since expired and on which R9 million had already been spent. They considered SunSpace a strategic company, which could compete globally in this area and as such a very necessary institution.

Dr Val Munsami, Manager: Space Science and Technology, DST, replied to the issue of an implementation role versus a coordination role for the Agency. A regulatory instrument in the form of the Space Affairs Act would mandate the agency to develop space technology. The DTI would take a lead in implementation but could not play and referee. The response from the DST in the presentation document had no detail, but it had been elaborated upon in the meeting. Regarding subsections 5(2)(c)(i) and (ii), he said It was a highly regulated sector as per certain UN resolutions passed in  2004, which stated that non-state actors should not have possession of such technology. TIA would regulate such highly sensitive technology. SunSpace by their own admission had stated that they were the only company in South Africa capable of developing a satellite. The DST had done an industry audit to find out which companies considered themselves capable of this and had received 60 submissions. They had brought this down to eighteen meaningful contenders that could play a role in the space sector. They had levelled the playing fields in this respect. It was a human fear that the agency would become a monopoly and reduce their market share. Eight satellites were planned for manufacturing over the next year. It was critical that transformation be also on the agenda.

Mr Tolo said the fear expressed by SunSpace seemed unfounded. The PFMA did not allow contravention of the law in this respect.

Mr Munsani reminded him that they were talking about an outside agency and not a government department.

Mr Tolo said he saw no reason to doubt the information given by DST as these were people of integrity. He thanked all present for their engagements. He said the oversight function of the Committee could always be called upon by parties if they felt there was call for it and they were being unjustly treated in contradiction to what had been stated in Parliament.

Mr Olivier said there had been certain misrepresentations by the Department. They had lost engineers to wider industry and overseas and had reached a critically low level of capacity. The Department seemed confused about the difference between aeronautical and space technology as they had very different quality standards. This had partly brought about a deadlock in negotiations between the Department and SunSpace.

Mr Tolo said the parties needed to thrash things out as they obviously needed each other.

Mr Setona agreed and said contract issues could not be discussed in the tribunal of the people. There was an existing framework with historical issues, in which the Committee could not arbitrate. They were here simply to discuss policy issues and as such they had the right to air their grievances. He warned against setting unwanted and undesirable precedents.

Mr Tolo asked to end the debate. It was his view this was not a legal issue, but a policy matter. He asked if any parliamentary advisor could advise on the matter.

A parliamentary advisor confirmed this.

Mr Tolo asked whether there were any other parties that wished to effect amendment to the Bill.
He said they had looked at the text to see there was no need for change.

Voting on the Bill
Mr Tolo read out the objects of the Bill.

All clauses of the Bill were agreed to by the Committee. It was reported that the Select Committee had, on the subject of the South African National Space Agency Bill of 2008, agreed to the bill without any amendments.

The draft minutes of meetings on 18 June, 29 July, 19 and 27 August were then adopted.

The meeting was adjourned.