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SAISC’s Successful Efforts to have Power Pylons Designated will create more than1500 new Jobs

During the COP 2011 Conference in Durban, December 2011, a major job creation initiative went almost unnoticed:  Minister Rob Davies declared a few products including power pylons used for the transmission of high voltage electricity throughout South Africa as ‘designated products’. It is estimated that 1200-1500 new jobs will be created as a result.

Designation essentially means that ‘organs of state’, including state-owned enterprises (SOEs) such as ESKOM and Transnet, as well as provincial and municipal entities and others have to buy those goods from local producers.  Designated products require a certain minimum level of local content in terms of the Preferential Procurement Policy Framework Act (PPPFA), which came into effect at the beginning of December 2011. This is not intended to take the place of the various other government efforts to encourage local procurement and supplier development strategies, but rather to support these.

The effect on the local power pylon producers as well as producers of all the equipment needed to build these lines is encouraging.  The past few years saw producers scaling down, retrenching and closing down operations in spite of the growing demand for new transmission lines from ESKOM, mainly as a result of imported products of acceptable quality from the Far East being offered at subsidised prices.

The Southern African Institute of Steel Construction (SAISC) consistently monitored these imports and tried to mitigate this situation by analysing the industry, making contact with ESKOM and all industry participants, and exploring various avenues, including possible participation in the CSDP (Competitive Supplier Development Program).  Ultimately the SAISC compiled and submitted to ITAC (International Trade Agreement Committee) on behalf of the industry an application for 15% import protection.  This was granted by the DTI after due process and gazetted in March 2011. Unfortunately it came too late to prevent tens of thousands of tons of ready-made power pylons being imported.  When, however, the SAISC became aware of the investigations into appropriate designated products, it submitted an application and motivation for power pylons to the DTI.

ESKOM’s Transmission Ten Year Development Plan for the period 2012 to 2021 provides details of their annual requirements for various new extensions of the 400kV and 765kV transmission network as well as for the new transmission lines needed to transmit electricity from the two new coal fired power stations, Medupi, near Lephalale (Ellisras) and Kusile, near e’Malahleni (Witbank).  The total requirement for new power pylon steelwork for this period is in excess of 420 000 tons, an average of some 42 000 tons per year.  This requirement is, of course, not smoothed out and various peak load periods are foreseen.  

In addition, the industry anticipates similar tonnages of power pylon steelwork that will be needed to repair, maintain and replace existing power lines.  These requirements will also not be dispersed uniformly but will provide an opportunity of spreading the load over the period.
Developments in South Africa’s neighbouring countries add a further demand for transmission lines and South Africa’s proximity and good reputation give us a distinct advantage.

It is calculated that this initiative will create between 1200 and 1500 full time ‘decent’ jobs just to provide the new requirements. These jobs represent a wide variety of skills and crafts including boilermakers and welders for production as well as electricians and millwrights to maintain and repair equipment.  Other skills required are CNC and other machine operators, drilling operators, cropping machine operators, plasma cutter and cutting torch operators, slingers, forklift drivers, galvanizing plant operators, OC inspectors, crane drivers, handlers and bundlers, forklift and truck drivers as well as various services such as security, dispatch, cleaning, etc.  Many further skills are required for the building of the power lines as well as the fitting of ancillary equipment.

It is important to note that a powerful ‘multiplier effect’ applies in the industry where for every 1000 direct jobs created a total of 2600 full time decent jobs are achieved to supply materials, requirements, transportation, clothing, food and the many services in the South African economy.  All these people contribute positively to the economy and carry a significant number of dependents. Buying a R1m project locally results in R1.43m of economic activity, and R0.36m in taxes!

An opportunity exists to apply for more products to be declared ‘designated’.  The requirements are strict, and comprehensive information setting out the need and business case will need to be researched and then submitted.  A further consideration is that only SOEs can be ‘instructed’ to buy South African.  It is important that producers continue to strive for competitiveness to encourage all clients investing in infrastructure to create decent local jobs through local procurement.

For further information please contact Kobus de Beer on 011 726 6111

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