Questions & Replies: Economic Development B
2015-07-07
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Reply received: June 2015
PARLIAMENTARY QUESTION NO 1919
DATE OF PUBLICATION: 22 MAY 2015
Mr S J F Marais (DA) to ask the Minister of Economic Development:
(a) Who are the current chief financial officers of (i) his department and (ii) the entities reporting to him and (b) what is the qualification of each chief financial officer? NW2140E
REPLY
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EDD |
Ms Semphete Oosterwyk (Thobejane) |
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IDC |
Mr Gert Gouws
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Competition Commission |
Mr Thomas Kgokolo |
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Competition Tribunal |
Ms Janeen de Klerk |
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ITAC |
Mr Zanoxolo Koyana |
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Reply received: June 2015
PARLIAMENTARY QUESTION NO 1884
DATE OF PUBLICATION: 22 MAY 2015
Mr T W Mhlongo (DA) to ask the Minister of Economic Development:
Since 1 January 2015, has his department installed generators at any of (a) its offices or (b) the offices of the entities reporting to him as a result of load shedding; if so, what is the total cost of the (i) installation and (ii) running of these generators? NW2105E
REPLY
EDD and its entities did not install any generators since 1 January 2015.
Reply received: June 2015
PARLIAMENTARY QUESTION NO 1781
DATE OF PUBLICATION: 15 MAY 2015
Mr R A Lees (DA) to ask the Minister of Economic Development:
(1) Whether, with reference to the reply of the Minister of Trade and Industry to question 1573 on 5 May 2015, the kenaf fibre processing plant in the Winterton district of KwaZulu-Natal is (a) functional and (b) profitable; if not (i) why not and (ii) when will it be (aa) fully operational and (bb) profitable, (iii) what are the relevant details of the costs incurred (aa) from the date the project was initiated up to 31 March 2015 and (bb) on a current monthly basis, (iv) what are the relevant details of all employees both (aa) formerly and (bb) currently employed, (v) what is to be done with the (aa) property, (bb) plant and (cc) equipment that was acquired for the project; if so, (aaa) how many permanent jobs have been created, (bbb) what volume of kenaf fibre has been (aaaa) produced and (bbbb) sold and (ccc) what are the relevant details of the (aaaa) costs of the project to date and (bbbb) contributions to these costs that has been made by (aaaaa) the State, (bbbbb) agencies of the State, such as the Industrial Development Corporation and (ccccc) other persons or entities;
(2) what are the relevant details of the (a) origins and (b) business plan of this project? NW2000E
REPLY
I have been provided with details of the company, Sustainable Fibre Solutions, by
the Industrial Development Corporation (IDC); which details are as follows:
Sustainable Fibre Solutions (“SFS”), based in Winterton, was established in 2006 to process Kenaf stalk, and was co-owned by the IDC and Seardel Investment Corporation (“Seardel”). The objective behind the project was involvement in the de-cortication of kenaf stalk to produce bast fibre, core and fines used in the manufacture of bio-composites for automotive use. The processing plant was fully commissioned in March 2008. In June 2009, the IDC approved the purchase of Seardel’s shareholding. SFS is now a wholly owned subsidiary of the IDC, with total investment by the IDC since inception amounting to R130m.
SFS failed to penetrate the market due to, inter alia, poor quality of the fibre produced, resulting in the project being moth-balled by the IDC, in an attempt to cut the recurring losses. Losses per year amounted to plus / minus R10m before the project was mothballed. The IDC has been given two different explanations for the poor quality of the fibre: the appropriateness of the technology and the poor quality of the kenaf.
Interventions by the IDC included negotiations with potential operating partners (including an Italian kenaf producer) and changes to the management team.
The project previously employed circa 25 (including 9 permanent employees) people before it was mothballed. Currently, the plant employs 2 full-time employees, who are looking after the assets to ensure preservation of the assets.
I am advised that the plant is to remain mothballed until an appropriate solution, which could include, inter alia, partnering with a potential strategic equity investor (thereby reducing the future funding obligation on IDC) or potential sale of the assets to recoup the investment costs & limit future losses. Costs to maintain the operations under care and maintenance amount to +-R2.7m per annum.
Reply received: June 2015
PARLIAMENTARY QUESTION NO 1721
DATE OF PUBLICATION: 15 MAY 2015
Ms D Carter (Cope) to ask the Minister of Economic Development:
Whether the Government was investigating why the price of brown bread was not 20% to 30% lower than white bread considering the fact that brown bread is exempted from value-added tax, requires less milling and refining and there is greater extraction of meal per kilogram of wheat; if not, why not; if so,
what was the (a) outcome of the investigation and (b) corrective measure flowing therefrom? NW1939E
REPLY
The EDD agency responsible for enquiries into the market conduct is the Competition Commission. It derives its mandate from the Competition Act.
The information in the possession of the Commission indicates that during the period January 2008 to April 2015 the 600gr brown bread was on average 15.5% cheaper in price than white bread and the 700gr brown bread was on average 11,7% cheaper than white bread.
There are 2 ways in which the Commission investigates allegations of anticompetitive conduct. First, any person may provide information concerning an allegation of a breach of a prohibited practice to the Commission. When a complaint is received, the Commission directs an inspector to investigate the complaint. Second, the Commissioner may initiate an investigation if he has some information pointing to anticompetitive conduct.
While no investigation has been conducted on the price of brown vs white bread, the Commission investigated anti-competitive conduct previously, resulting in a finding against Tiger Brands, Foodcorp and Pioneer Foods, all of who were found to have taken part in a cartel that manipulated the price of bread.
During its investigation into the cartel conduct the Commission found that the general approach by the cartel members was to have formal and informal meetings to discuss price increases and implementation dates of the agreed increases. The uncovering of the bread cartel was aided by the corporate leniency applications from Premier Foods and Tiger Brands that required full disclosure of information and steps to be taken to dismantle the cartel. Through the corporate leniency applications, the Commission discovered that the cartel members were also fixing the price of flour and the price of maize meal.
Based on the evidence before the Commission and the provisions of the Competition Act, penalties were levied against Tiger Brands (R98 million), Foodcorp (R45 million) and Pioneer Foods (R196 million).
Reply received: May 2015
PARLIAMENTARY QUESTION NO 1543
DATE OF PUBLICATION: 24 APRIL 2015
Mr S J F Marais (DA) to ask the Minister of Economic Development:
(1) On what basis and merits were the respective initiatives for the (a) 2015-16, (b) 2016-17 and (c) 2017-18 financial years determined for Key Performance Indicator 15 in his department’s strategic plan;
(2) (a) how many investment initiatives were identified for the (i) 2014-15 and (ii) 2015-16 financial years and (b)(i) how many initiatives were finalised in the 2014-15 financial year and (ii) what (aa) are the relevant details and (bb) is the nature of the specified initiatives? NW1754E
REPLY
- (a) (b) (c) The facilitation, fast tracking and/or unblocking of investment initiatives is demand driven, and future demand is difficult to predict. The targets for the next three years are EDD’s projection of the minimum number of anticipated requests for support by investors, based on historical trends. Account is also taken of internal capacity.
- (a) (i) During the 2014-15 financial year, the APP identified 10 initiatives for unblocking, (ii) 10 initiatives is planned for the 2015/16 (b) (i) 13 interventions were finalized in the 2014-15 financial year.
The Department has prepared a schedule of interventions attended to, which are attached hereto:
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(aa) what are the relevant details |
(bb) nature of the specified initiatives |
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1 |
Sihlela Community Project (Forestry) |
The Sihlela Community Project proposed to develop 350 hector of forestry plantation, with joint funding of R5 million each from the IDC and Sappi, that would support 500 families. EDD facilitated the approval of the consent order from DRDLR that opened the way for the IDC to invest in the project.
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Beares and Lewis merger |
Fast tracked the competition process for the buy-out by Lewis Furniture of 63 Beares Furnishers stores (the Lewis offer to purchase was time bound). This intervention avoided the liquidation of these stores and resulted in the saving of 352 jobs, with the potential for the creation of 93 additional jobs.
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Mediterranean Textile |
The business was experiencing financial difficulty and was in the process of being liquidated. Through the facilitation of negotiations with relevant parties and the IDC, an existing clothing manufacturer acquired the Umuzi Clothing division of Mediterranean Textile resulting in the saving of approximately 150 jobs.
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MPACT |
EDD intervention facilitated the decision by the Ekurhuleni Metro Municipality to provide the required energy for the construction of a R 350 million plant (substantially funded by the IDC) to recycle plastic bottles.
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Pulp United Company |
Resolved a dispute between the IDC and the uMhlathuze municipality on the sale of municipal land for this project. This has enabled the IDC in taking a decision to do a feasibility study for an investment in a pulp factory valued at US$ 250 million.
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Phosphate industry |
Industry representatives approached the EDD regarding the Competition Tribunal (CT) restriction on Phosphate prices which was negatively impacting on the viability of the phosphate industry. In 2007, the CT ruled that the export parity price of phosphate was excessive and made an order for a price reduction, (at the time phosphate was selling at $2 200, global price has since dropped to around $650), the CT decision resulted in a domestic price of phosphate reducing to below domestic production cost in the current commodity cycles. In going through the records it was found that the CT decision was valid for 3 years but South Africa’s selling prices were based on the CT’s 2007 decision. The review of documents uncovered that the industry was no longer bound by the 2007 decision, hence opening the way to increase prices which will also assist in recovering production costs..
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Noble Resources – Lekwa Municipality (Standerton) |
SANCO members planned to picket between 24-26 June at Noble Resources plant, a newly established foreign investment, as community members were unhappy with Noble’s employment of people from outside of Lekwa’s municipal area. EDD facilitated a meeting between management of Noble and community representatives which resulted in the cancelation of the planned picket and any disruption to production.
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Nestle |
Nestle complained of water and electricity cuts in Babelegi near Tshwane as a result of cable theft, which lead to production losses. EDD facilitated a meeting between the City of Tshwane, CoGTA and Eskom in July 2014, as a result of which mitigation measures were implemented, including better policing of hotspots and better maintenance of transformers (which also contributed to loss of energy).
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The Silvapen Company |
Silverpen is developing a Bio-Fuel Ethanol project in KZN and was having difficulty in securing a lease agreement for rural land for a number of months. EDD’s intervention facilitated the signing of the lease agreement in July 2014.
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Ms Boitumelo Taho an informal perfume/cream manufacturer |
Assisted Ms Taho, an informal perfume manufacturer, in registering her business, in analyzing her cost of production and introduced her to the Innovation Hub, which assisted her with quality control and packaging of her product.
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Sesli Textile |
EDD introduced Sesli Textile to the Textile Federation and SARS (Customs) which resulted in the formation of relations to deal with illegal imports of blankets. As a result Sesli is providing technical support to the Textile Federation and SARS to ensure that imports are not under declared or declared on the wrong tariff codes in order to under pay duties
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Potato Processing industry |
The potato processing industry was destabilized by a surge in imports. EDD facilitated interaction with ITAC to fast-track consideration of an application for increased duty, which was approved by ITAC.
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BTT Construction |
Sefa loan to the client was not being paid out due to a misunderstanding between BTT and sefa on the terms and condition for the loan. Facilitated communications between the parties and after clarity provided the loan was paid out.
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