1 00:00:00,040 --> 00:00:03,440 Speaker 1: Our International Trade Administration Commission now seems to be recommending 2 00:00:03,720 --> 00:00:06,040 Speaker 1: that some duties on some of the parts used to 3 00:00:06,040 --> 00:00:10,240 Speaker 1: build renewable power generation units be increased. They're also recommending 4 00:00:10,600 --> 00:00:14,280 Speaker 1: that certain text rebates for manufacturing solar products be removed 5 00:00:14,480 --> 00:00:17,880 Speaker 1: when our solar manufacturing capacity grows to a particular level. 6 00:00:18,160 --> 00:00:22,120 Speaker 1: Ayabongakawe is the chief Commissioner at I Tech. Chief Commissioner, 7 00:00:22,120 --> 00:00:23,880 Speaker 1: Good evening. I hope I don't catch you in a 8 00:00:23,880 --> 00:00:27,360 Speaker 1: petrol queue tonight. I think many people are trying to 9 00:00:27,400 --> 00:00:30,440 Speaker 1: go renewable as fast as they can. I mean, particularly 10 00:00:30,520 --> 00:00:33,440 Speaker 1: with Eskim doing what Eskiam's doing. What are you suggesting 11 00:00:33,520 --> 00:00:35,760 Speaker 1: for the equipment you need to build that capacity. 12 00:00:36,800 --> 00:00:39,159 Speaker 2: Good evening to you, Stephen, and good evening to your listeners. 13 00:00:39,320 --> 00:00:41,320 Speaker 2: I must assure you I tried to fill up a 14 00:00:41,320 --> 00:00:44,240 Speaker 2: bit earlier, so as I was driving home this evening, 15 00:00:44,280 --> 00:00:47,159 Speaker 2: I managed to catch sight of some of the very 16 00:00:47,159 --> 00:00:51,920 Speaker 2: long queue. So I certainly commiserate with many of those 17 00:00:51,960 --> 00:00:56,080 Speaker 2: who find themselves with the cues tonight. But indeed, the 18 00:00:56,160 --> 00:01:01,440 Speaker 2: gazette we issued on Friday is part of a review 19 00:01:01,560 --> 00:01:06,080 Speaker 2: that had been triggered by a ministerial directives towards the 20 00:01:06,120 --> 00:01:08,400 Speaker 2: earlier parts of last year, and I think we've now 21 00:01:08,480 --> 00:01:12,679 Speaker 2: arrived at the stage where we've issued some preliminary findings 22 00:01:12,760 --> 00:01:17,679 Speaker 2: following evidence gathering, a form of verification to try and 23 00:01:17,680 --> 00:01:21,000 Speaker 2: get a sense in the first instance, of what are 24 00:01:21,120 --> 00:01:28,640 Speaker 2: these components pieces, nuts and bolts literally that go into 25 00:01:29,120 --> 00:01:32,720 Speaker 2: all manner of renewable technologies and systems that South Africa 26 00:01:32,800 --> 00:01:35,720 Speaker 2: has a capability. And I think the Gazette is really 27 00:01:35,720 --> 00:01:41,040 Speaker 2: lifting up whether those are particular to solar, wind, battery, 28 00:01:41,200 --> 00:01:43,679 Speaker 2: energy storage and so on, and even what is called 29 00:01:43,720 --> 00:01:49,280 Speaker 2: balance of plants, so you're wiring your inverters, transformers and 30 00:01:49,320 --> 00:01:51,960 Speaker 2: so on, where over time we've developed a capability. So 31 00:01:52,560 --> 00:01:54,880 Speaker 2: we've got a few proposals here. One of these is 32 00:01:54,960 --> 00:01:58,200 Speaker 2: those that you've mentioned of raising DUTs where we have 33 00:01:58,320 --> 00:02:02,960 Speaker 2: some of this capability on hand to their bound rates, 34 00:02:03,080 --> 00:02:05,480 Speaker 2: and I think it's still a preliminary finding at this stage. 35 00:02:05,800 --> 00:02:08,840 Speaker 2: But also in relation to the rebate, I think the 36 00:02:08,880 --> 00:02:12,000 Speaker 2: listeners would know that a few years ago, the Commission 37 00:02:12,000 --> 00:02:16,120 Speaker 2: investigated and the Executive Authorities approved a tariff of ten 38 00:02:16,120 --> 00:02:19,720 Speaker 2: percent on solar, which was accompanied by a rebate because 39 00:02:19,760 --> 00:02:23,120 Speaker 2: we didn't want to penalize South Africans, you and me, 40 00:02:23,320 --> 00:02:26,760 Speaker 2: or even project owners for their not being enough capability 41 00:02:26,800 --> 00:02:30,800 Speaker 2: to supply solar projects and even household soda. And we're 42 00:02:30,800 --> 00:02:33,720 Speaker 2: now saying that any consideration of the discontinuation of that 43 00:02:33,840 --> 00:02:37,360 Speaker 2: rebate has to be accompanied by a significant ramp up 44 00:02:37,400 --> 00:02:40,880 Speaker 2: of the ability to supply, rather than just discontinue with 45 00:02:41,000 --> 00:02:44,160 Speaker 2: it and effectively having a cost raising effect on many 46 00:02:44,200 --> 00:02:46,760 Speaker 2: of those who may wished to buy a sola. 47 00:02:46,960 --> 00:02:49,680 Speaker 1: Okay, I mean, obviously, I think many people, And I 48 00:02:49,680 --> 00:02:51,840 Speaker 1: think if you ask any South African who's currently on 49 00:02:52,000 --> 00:02:54,359 Speaker 1: ESK him, do you want to go renewable? They he'll 50 00:02:54,440 --> 00:02:58,639 Speaker 1: say yes. And every company too, well, probably. 51 00:02:58,280 --> 00:03:00,200 Speaker 2: More would have said so a few years ago. But 52 00:03:00,240 --> 00:03:02,040 Speaker 2: I think the situation is a lot better that No. 53 00:03:02,080 --> 00:03:04,240 Speaker 1: Sure, but the cost of it is so expensive as 54 00:03:04,200 --> 00:03:07,240 Speaker 1: is No. Indeed, I realized that with trade it's very 55 00:03:07,240 --> 00:03:11,440 Speaker 1: difficult to simplify things. But if the preliminary findings that 56 00:03:11,480 --> 00:03:14,840 Speaker 1: you've made are implemented, what do you expect then it 57 00:03:14,880 --> 00:03:17,919 Speaker 1: would be more expensive to get the equipment you need 58 00:03:17,960 --> 00:03:21,920 Speaker 1: to generate renewable power. Would that be a consequence, Well. 59 00:03:21,840 --> 00:03:24,280 Speaker 3: I think it would depend Stephen, So it would depend 60 00:03:24,400 --> 00:03:28,120 Speaker 3: on many other factors. But a textbook reading, which is 61 00:03:28,160 --> 00:03:31,480 Speaker 3: often not a very helpful one, is that if there 62 00:03:31,520 --> 00:03:33,880 Speaker 3: is full pass through of the duties on the part 63 00:03:33,919 --> 00:03:37,680 Speaker 3: of many importers, that this may also serve to raise 64 00:03:37,720 --> 00:03:41,400 Speaker 3: the price of even imported material. I think we must 65 00:03:41,440 --> 00:03:44,320 Speaker 3: also accept Stephen that much of the pricing we've also 66 00:03:44,360 --> 00:03:48,360 Speaker 3: seen in many renewable systems and components have been subject 67 00:03:48,440 --> 00:03:51,360 Speaker 3: to artificially low prices on the back of overcapacity in 68 00:03:51,400 --> 00:03:53,960 Speaker 3: many of the origin countries or some of these imports, 69 00:03:54,440 --> 00:03:57,360 Speaker 3: and so in a sense one might say you cannot 70 00:03:57,400 --> 00:04:02,640 Speaker 3: avoid some marginal lift in pricing. But this is also 71 00:04:02,640 --> 00:04:05,800 Speaker 3: a very competitive landscape, and so you're likely to find 72 00:04:06,920 --> 00:04:09,800 Speaker 3: to varying degrees absorption of the tariff on the part 73 00:04:09,840 --> 00:04:12,760 Speaker 3: of some of the distributors' importers and even some of 74 00:04:12,760 --> 00:04:13,920 Speaker 3: the domestic producers. 75 00:04:14,720 --> 00:04:16,680 Speaker 2: But I think we need to factor into the mix 76 00:04:16,880 --> 00:04:21,799 Speaker 2: many considerations beyond just the prices, of lead times, even 77 00:04:21,839 --> 00:04:24,800 Speaker 2: of repair and maintenance components. You may have an inverter 78 00:04:24,880 --> 00:04:28,000 Speaker 2: in your home that, if it needs to be serviced, may, 79 00:04:28,160 --> 00:04:30,480 Speaker 2: on the back of some of the conflict we see, 80 00:04:30,960 --> 00:04:33,279 Speaker 2: be subject to massive lead times for you to get 81 00:04:33,279 --> 00:04:35,279 Speaker 2: some of the parts you need if you're having to 82 00:04:35,320 --> 00:04:37,480 Speaker 2: wait for those to be put on a boat in 83 00:04:37,560 --> 00:04:39,840 Speaker 2: order to come here. So in a way, this is 84 00:04:39,880 --> 00:04:43,280 Speaker 2: also about building the resilience of our own domestic supply 85 00:04:43,400 --> 00:04:46,920 Speaker 2: base to be able as we transcision, an important transition 86 00:04:47,040 --> 00:04:49,880 Speaker 2: that all of us are committed to that as we transition, 87 00:04:50,000 --> 00:04:52,560 Speaker 2: we're able to balance the mix of the sources of 88 00:04:52,600 --> 00:04:54,799 Speaker 2: the supply for many of these components that have become 89 00:04:55,240 --> 00:04:56,640 Speaker 2: very much a part of our lives now. 90 00:04:57,360 --> 00:05:00,839 Speaker 1: So you talk about some of the country that produce this, 91 00:05:01,000 --> 00:05:03,760 Speaker 1: the supplying countries, and maybe we should talk about what 92 00:05:03,800 --> 00:05:08,400 Speaker 1: we're talking about, which is China. Their capacity has been growing. 93 00:05:08,400 --> 00:05:11,280 Speaker 1: I think it was thirty percent a year. A year ago, 94 00:05:12,120 --> 00:05:16,839 Speaker 1: they have eighty percent of world solar equipment manufacturing capacity. 95 00:05:18,160 --> 00:05:20,960 Speaker 1: I have to say, I worry that we're kind of, 96 00:05:21,120 --> 00:05:23,720 Speaker 1: you know, throwing water into the wind our industry. Will 97 00:05:24,200 --> 00:05:28,000 Speaker 1: I mean, could our industry rarely grow to provide products 98 00:05:28,000 --> 00:05:30,919 Speaker 1: that are cheaper than they can? Won't they just absorb 99 00:05:30,960 --> 00:05:32,640 Speaker 1: the cost and then what have we gained from that? 100 00:05:34,120 --> 00:05:36,480 Speaker 2: Well? I mean, this is the point I was raising, Stephen, 101 00:05:36,560 --> 00:05:41,000 Speaker 2: that the extent of competition in this market may mean 102 00:05:41,240 --> 00:05:46,480 Speaker 2: significant cost absorption, but really the behavioral response we envisage 103 00:05:46,480 --> 00:05:50,400 Speaker 2: in this instance is for some of that cutting edge technology, 104 00:05:50,440 --> 00:05:52,760 Speaker 2: which is not only just about ramping up capacity. I 105 00:05:52,800 --> 00:05:58,360 Speaker 2: think Chinese producers have invested considerably along the entire value chain. 106 00:05:58,400 --> 00:06:01,279 Speaker 2: If you take, for argument and sake some of the 107 00:06:01,320 --> 00:06:07,000 Speaker 2: intermediate inputs of photosilicon, where the Chinese have become super dominant, 108 00:06:07,480 --> 00:06:10,840 Speaker 2: you do want some of that capability to be offshore 109 00:06:10,920 --> 00:06:14,360 Speaker 2: to South Africa for at least last mile assembly. If 110 00:06:14,360 --> 00:06:18,559 Speaker 2: you look at the cells themselves, those are still coming 111 00:06:18,560 --> 00:06:20,920 Speaker 2: in at very very low duties or no duties at all. 112 00:06:21,279 --> 00:06:24,920 Speaker 2: What we're trying to incentivize here is some acquisition of 113 00:06:24,960 --> 00:06:29,320 Speaker 2: the capabilities in downstream assembly of some of these activities. 114 00:06:30,000 --> 00:06:32,320 Speaker 2: One as a mechanism to diversify where it is that 115 00:06:32,360 --> 00:06:35,360 Speaker 2: we source them from in an increasingly hostile world. But 116 00:06:35,440 --> 00:06:39,520 Speaker 2: second to that, in line with our prevailing policy which 117 00:06:39,520 --> 00:06:41,160 Speaker 2: has been around since two thousand and three. If you 118 00:06:41,200 --> 00:06:43,760 Speaker 2: think of the white paper and renewable energy, that you 119 00:06:43,839 --> 00:06:48,200 Speaker 2: cannot have this transition not being accompanied by some industrial 120 00:06:48,279 --> 00:06:52,440 Speaker 2: articulations in areas that we already have capability to produce. 121 00:06:52,520 --> 00:06:55,520 Speaker 2: So it's not just the solar panels themselves. Steam there 122 00:06:55,560 --> 00:06:59,520 Speaker 2: are areas where we do have cost competitive production in 123 00:06:59,560 --> 00:07:03,040 Speaker 2: Southern if you think of a balance of plant, if 124 00:07:03,040 --> 00:07:07,840 Speaker 2: you think of some of the other incidental components which 125 00:07:07,839 --> 00:07:12,240 Speaker 2: we list out in the Gazette in considerable details, and similarly, 126 00:07:12,640 --> 00:07:15,320 Speaker 2: as you would imagine, the Gazette is also lifting up 127 00:07:15,720 --> 00:07:19,800 Speaker 2: further upstream some of the raw material and resource requirements 128 00:07:19,800 --> 00:07:22,320 Speaker 2: that you might have. So let me give you an example. 129 00:07:22,600 --> 00:07:26,680 Speaker 2: If you're talking about kind of threaded screws, bolts, nuts, 130 00:07:26,800 --> 00:07:33,800 Speaker 2: aluminium alloys, washers, motors, DC generators, lamp holders, sockets, we've 131 00:07:33,800 --> 00:07:36,480 Speaker 2: already had a capability in those products for many years, 132 00:07:37,440 --> 00:07:40,680 Speaker 2: and give or take a few kind of scents or 133 00:07:40,760 --> 00:07:44,720 Speaker 2: rands are relatively cost competitive as it relates to those products. 134 00:07:44,880 --> 00:07:47,360 Speaker 2: But I think it's not just about solar. If you 135 00:07:47,440 --> 00:07:50,320 Speaker 2: take the wind value chain, for instance, many of our 136 00:07:50,360 --> 00:07:53,360 Speaker 2: producers have solely only been locked into the tower production, 137 00:07:54,320 --> 00:07:56,560 Speaker 2: and so we start to think through how do we 138 00:07:56,640 --> 00:08:00,840 Speaker 2: use our trade instruments to incentivize is the acquisition of 139 00:08:00,880 --> 00:08:04,880 Speaker 2: capabilities and some of the more relatively more complex parts 140 00:08:05,200 --> 00:08:08,840 Speaker 2: system components, the components that go into a nassole or 141 00:08:08,880 --> 00:08:12,240 Speaker 2: a rotor blade and all of those, And of course 142 00:08:12,280 --> 00:08:15,480 Speaker 2: it's not going to happen overnight. You want to transision, 143 00:08:15,600 --> 00:08:17,760 Speaker 2: but you also want to lock in imbalance of plant, 144 00:08:18,480 --> 00:08:22,720 Speaker 2: some demand profile for your existing producers, or else we're 145 00:08:22,720 --> 00:08:24,840 Speaker 2: going to end up importing these things lock stock and bowl. 146 00:08:26,720 --> 00:08:29,960 Speaker 1: But this really does require the production here to grow. 147 00:08:30,000 --> 00:08:32,560 Speaker 1: There needs to be lots of demand for it. I mean, 148 00:08:32,760 --> 00:08:36,800 Speaker 1: I realized, obviously duties should create that demand we once had. 149 00:08:36,840 --> 00:08:38,600 Speaker 1: I mean, I think we ended up going down to 150 00:08:38,720 --> 00:08:42,360 Speaker 1: just one producer of solar pads for a while. I 151 00:08:42,360 --> 00:08:44,959 Speaker 1: think they're three now. You might have bore up to 152 00:08:45,040 --> 00:08:47,680 Speaker 1: date figures the ninety I mean, you really need the demand. 153 00:08:47,720 --> 00:08:49,960 Speaker 1: If the demand is there, then this doesn't become a problem. 154 00:08:50,840 --> 00:08:53,520 Speaker 2: Indeed, I'm one hundred percent with you. Then I think 155 00:08:53,520 --> 00:08:58,040 Speaker 2: that that's probably where the renewable energy independent power producer 156 00:08:58,080 --> 00:09:02,160 Speaker 2: program has probably eight if we are to be candid, 157 00:09:02,240 --> 00:09:06,120 Speaker 2: some tactical errors that we're learning from, which is why, Stephen, 158 00:09:06,559 --> 00:09:09,600 Speaker 2: one of the preliminary findings we're making here is to say, 159 00:09:10,080 --> 00:09:15,880 Speaker 2: as it relates to fully assembled panels, single access trackers, inverters, fasteners, 160 00:09:15,880 --> 00:09:19,240 Speaker 2: and tower sections, we think that these ought to be 161 00:09:19,240 --> 00:09:23,000 Speaker 2: designated for local procurement and local content in line with 162 00:09:23,120 --> 00:09:27,280 Speaker 2: the Procurement Act twenty eight of twenty twenty four, and 163 00:09:27,320 --> 00:09:29,800 Speaker 2: we understand the regulations in line with Section twenty of 164 00:09:29,800 --> 00:09:34,600 Speaker 2: that Act are set to be imminently published and we 165 00:09:34,640 --> 00:09:38,600 Speaker 2: certainly hope on the back of our verified capability. So 166 00:09:38,640 --> 00:09:41,439 Speaker 2: we've gone out got in a sense, as you correctly say, 167 00:09:41,440 --> 00:09:44,040 Speaker 2: we've lost a lot of capability in soda. But there 168 00:09:44,080 --> 00:09:47,520 Speaker 2: are instances if you look at mounted trackers, if you 169 00:09:47,520 --> 00:09:51,880 Speaker 2: look at single access trackers, inverters, fasteners, where you actually 170 00:09:51,960 --> 00:09:54,959 Speaker 2: have a considerable amount of capability, and so the question 171 00:09:55,040 --> 00:09:56,800 Speaker 2: mark is do you want to lose more of that 172 00:09:57,400 --> 00:10:01,120 Speaker 2: by not earmarking at least the demand that the public 173 00:10:01,120 --> 00:10:04,840 Speaker 2: sector has some control over. And then, of course and 174 00:10:04,880 --> 00:10:07,280 Speaker 2: so doing also begin to have a discussion of the 175 00:10:07,280 --> 00:10:10,600 Speaker 2: private sector about to what extent do they make use 176 00:10:10,960 --> 00:10:14,280 Speaker 2: in some of these identified products of the domestic capability. 177 00:10:14,760 --> 00:10:17,400 Speaker 1: Hi Banga Taue, thank you very much, indeed, Chief Commission 178 00:10:17,440 --> 00:10:20,920 Speaker 1: at the International Trade Administration Commission, such an interesting conversation.