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THE NATIONAL INDUSTRIALPARTICIPATION PROGRAMME
PRESENTATION TO PORTFOLIO COMMITTTEE ON TRADE AND INDUSTRY
October 2005
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Background
• Became obligatory to all government purchases in September 1996.
• Obligations monitored in the region of US$15 bn
• Main obligations arise out of purchases from the SDP and SAA.
• Other obligations from telecoms, IT transport and energy sectors.
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Main purpose
• To raise investment levels
• and to increase international market access for South African value-added goods and services
• by leveraging off government procurement.
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The NIP Obligation
• Seven years to fulfill the obligation
• Credits system used for monitoring purposes
• Performance guarantee required
• Responsibility lies solely with seller
• Purchasing decision independent of NIP
• NIP is a precondition but not a factor in the adjudication process
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Current Obligations
• Total Obligations approx US$15bn• US$13 bn arising out of Strategic
Defence Procurement• US$800m arising out of purchases by
SAA • Other purchases arising from Telkom,
Eskom, Transnet, national and provincial departments
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New Obligations
• Increased activity will result in substantial increase in non-defence obligations
• Energy Infrastructure– De-mothballing programme– New power stations
• Transport Infrastructure– Gautrain– Spoornet programme
• PBMR programme• World Cup 20106
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Current Obligations• Obligors have seven years to fulfill
obligation– BAE/SAAB has 11 due to size
(US$7.2bn)• Defence obligors have specific
milestones that must be met– First milestones due in 2004 – Second milestones due in 2005– Next milestones due in 2007 for
BAE/SAAB – Finalising April 2005 milestone for
Thyssen, Agusta and Thales
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Aggregate Performance
Investment Sales
Total Milestone 1 339 114 030 2 799 649 995
Performance 1 531 400 087 2 284 069 448
Percentage 114% 82%
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Aggregate Performance
9
% Performance
114.4%
81.6%92.2%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
Investment Sales Total
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Performance of Obligors
• Since inception over 130 projects approved and implemented
• Projects in various sectors and different regions
• These projects have generated– Investment Credits in excess of
US$1bn– Exports and Local Sales Credits of
US$2.5bn• Includes technology transfer, BEE
and SME promotion– 8 000 direct jobs
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Performance of defence obligors per milestones
• BAE/SAAB in aggregate almost achieved their first milestone target– Achieved more than 100% investment target– 95% overall achievement
• Agusta – Exceeded its first milestone targets – Currently at 68% of its second milestone due in
2005• Thales
– Achieved 100% of its investment target – Overall achievement of 93%
• Ferrostaal– Expected to achieved 82% of its milestone by
end of 2005• Thyssen
– Achieved 65% of its milestone due in April 2005
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BAE/SAAB Selected Projects
• Treacle Fund2 – targeting export based industries• Gold Advance Scheme – to stimulate jewellery
manufacturing in South Africa• Carbon Manufacturing – activated carbon for liquid
and gas filtration• Belmec High Pressure Die Casting – manufacture of
automotive components• Ferrochrome Smelter – new ferrochrome smeltering
facilities.
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Milestone Performance BAE / SAAB
BAE / SAAB NIP Credits by year
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00M
illio
ns
year
Cre
dits
US
$
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Thyssen Selected Projects
• Ferrochrome Smelter
• Aluminium Tubes – manufacture of radiators
• Dispack – packaging, plant services, technical and logistics
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Milestone Performance Thyssen
GFC NIP Credits by year
-
50.00
100.00
150.00
200.00
250.00
Mill
ion
s
year
Cre
dit
s U
S$
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Ferrostaal Selected Projects
• MAN Turbo Projects – Production of turbine blades• Magwa Tea Estate – Tea plantation in Lusikisiki• Hosaf PET Recycling Plant – Recycling of plastic
bottles to produce polyesters• Atlantis Training Centre – training and further
qualifications in a range of industrial, technical and other skills
• Engineering Services – supply and implementation of industrial plants worldwide
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Milestone Performance Ferrostaal
GSC NIP Credits by year
-100.00200.00300.00400.00500.00600.00700.00
Mill
ion
s
year
Cre
dits
US
$
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Thales Selected Projects
• Blackstone Tek – Production of carbon fibre products
• Silicon Smelters and Fume Dioxide – Production of silicon metal and silicon fume dioxide
• Tenesa – Manufacturing of solar panels• Evertrade Medical Waste – Facilities for processing
and management of waste
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Milestone Performance - Thales
THALES NIP CREDITS BY YEAR
-
100,000,000.00
200,000,000.00
300,000,000.00
400,000,000.00
500,000,000.00
1 2 3 4 5
Years
Cred
its (U
S$)
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Agusta Selected Projects
• Filk Gold Chains – Manufacture of gold chains
• Cape Mohair – Spinning and dyeing for exports
• Mario Levi – Split leather production for motor vehicles
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Milestone Performance Agusta
AUGUSTA NIP CREDITS BY YEAR
0
50000000
100000000
150000000
200000000
250000000
1 2 3 4 5
YEAR
cRED
ITS
(US$
)
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Performance of Non-Defence Obligors
• Boeing has fulfilled its obligations three years ahead of schedule
• Airbus has achieved 20% of its obligation due in 2013– 30% achievement if SAA does not go
ahead with the purchase of the A320’s• All other non-defence obligors performing
satisfactory– Siemens, Alcatel, Alstom and Ericsson
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