CAPE TOWN — Seven manufacturing companies in South Africa face possible closure due the Department of Energy’s abrupt announcement of a R0 budget for the National Solar Water Heater (NSWH) programme before the parliamentary portfolio committee last month. Last year’s NSWH budget was R394m.
In at least one factory – Isolar in Atlantis – 85 employees have not received their salaries since February.
The NSWH programme started in 2010 as a rebate scheme under Eskom to replace existing electrified geysers with solar water heaters in order to alleviate the demand for power from the national grid. The initial target was one million solar water heaters by 2014. Only 400 000 units were installed under the rebate programme and in 2015 the Department of Energy took it over and changed the focus to providing solar water heaters to state-subsidised and unelectrified homes, setting a new cumulative target of 1.75 million units by 2019, and five million by 2030.
The existence of Isolar and other manufacturers was nurtured by the state programme, which also stipulated 70% of the components must be locally sourced.
Although questions sent to the DOE over a week ago remain unanswered despite numerous follow-ups by City Press, unofficial sources City Press spoke to at the Africa Utility Week conference in Cape Town this week believe the NSWH budget was reclaimed by Treasury due to lack of expenditure and failure of the programme. To date only about 87 000 of the proposed 1.25 million units have been manufactured, and the related installation phase of the NSWH programme has not been implemented at all. The 87 000 units remain stored in warehouses around the country.
At the energy budget vote speech on Wednesday, DA shadow minister for energy, Tandeka Gqada, said she believed part of the reason for the programme’s failure was it having been moved around. First from Eskom to the DOE, then late last year to the Central Energy Fund supported by the Independent Power Producer (IPP) Office.
Gqada said this was problematic as the Central Energy Fund “has its own challenges” and their managing the installation phase was not practical. Furthermore, the need for agreements with municipalities responsible for implementation was “too much of a risk”.
She said communication with the manufacturers affected by the removal of the budget was almost non-existent and it had “serious implications for our economy and our people”.
She said she had been in contact with three of the seven affected manufacturers who had won the bids to manufacture the solar water heaters. They had designed their scope of work in line with the original documents they had signed with the DOE and had invested a lot of money to deliver their orders. “With lack of clarity and communication from the department, these companies would likely close down,” said Gqada.
Isolar general manager Andre Fourie said the orders from the DOE increased as the factory capacity increased, allowing iSOLAR to grow from 15 staff in 2016, to 85 currently.
“The whole idea was, in theory, beautiful,” said Fourie.
But he said things started imploding in November last year, when they delivered their last purchase order, and no further order was forthcoming.
He said later in December the company received a letter from the DOE asking what its capacity for repair and replacement of solar water heaters was.
He believed the department were instituting the repair and replacement programme while they were “sorting out the political shenanigans”. (Former President Jacob Zuma had been outsed as president of the ANC in December, replaced by Cyril Ramaphosa, indicating a shift in power and the possibility of a looming cabinet reshuffle).
He said the repair and replace programme was also included in their tender award, so no new procurement was necessary. Briefing notes were sent, and the repair and replace programme was due to begin on 6 February. This was then moved to 22 or 23 February, then to 15 March. Then all communication stopped. “There was nothing.”
In early April they were informed the original tender cutoff date, which was 31 March, had been missed, which meant further requests for proposals related to supply, or repair and replacement, was cancelled.
Administrative staff manning the phones at the Isolar on a voluntary basis and hoping for any positive news from the DOE, said without salaries, some of their colleagues were facing eviction from houses or rooms they rented as they were not able to pay their rents. Others had used their job to extricate themselves from the drug and gang culture suffusing poverty-stricken Atlantis and were now having to sit at home all day and were being dragged back into the underworld.
Factory supervisor Jason Valentine (37) who still arrives at the Isolar factory every day despite having nothing to do, said he lived with his girlfriend in her parents’ house. As she also worked at Isolar, neither of them was receiving an income and they were all being forced to live off her parents’ pensions.
“Things are getting difficult at the house. “Mens voel nie lekker nie (a person doesn’t feel good), you eat food that you can’t pay for.”
Valentine said he also couldn’t get a loan to see them through because he didn’t know when, or if, they would get paid. Furthermore, he was expecting his first child to be born in six months.
Isolar administrators Shirmel Azure and Octavia Kotzee said the DOE still owed the company R40m for the last order completed in November. And even if new orders were placed, relationships with suppliers to whom the company owed money, would have to built up again from scratch.
Responding to questions on the NSWH at this week’s budget vote, deputy energy minister Thembisile Majola said the department was “very worried” about the seven companies but were “engaging with them”.
“We haven’t just let it go,” said Majola, “because every job loss is a concern to us.
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In at least one factory – Isolar in Atlantis – 85 employees have not received their salaries since February.
The NSWH programme started in 2010 as a rebate scheme under Eskom to replace existing electrified geysers with solar water heaters in order to alleviate the demand for power from the national grid. The initial target was one million solar water heaters by 2014. Only 400 000 units were installed under the rebate programme and in 2015 the Department of Energy took it over and changed the focus to providing solar water heaters to state-subsidised and unelectrified homes, setting a new cumulative target of 1.75 million units by 2019, and five million by 2030.
The existence of Isolar and other manufacturers was nurtured by the state programme, which also stipulated 70% of the components must be locally sourced.
Although questions sent to the DOE over a week ago remain unanswered despite numerous follow-ups by City Press, unofficial sources City Press spoke to at the Africa Utility Week conference in Cape Town this week believe the NSWH budget was reclaimed by Treasury due to lack of expenditure and failure of the programme. To date only about 87 000 of the proposed 1.25 million units have been manufactured, and the related installation phase of the NSWH programme has not been implemented at all. The 87 000 units remain stored in warehouses around the country.
At the energy budget vote speech on Wednesday, DA shadow minister for energy, Tandeka Gqada, said she believed part of the reason for the programme’s failure was it having been moved around. First from Eskom to the DOE, then late last year to the Central Energy Fund supported by the Independent Power Producer (IPP) Office.
Gqada said this was problematic as the Central Energy Fund “has its own challenges” and their managing the installation phase was not practical. Furthermore, the need for agreements with municipalities responsible for implementation was “too much of a risk”.
She said communication with the manufacturers affected by the removal of the budget was almost non-existent and it had “serious implications for our economy and our people”.
She said she had been in contact with three of the seven affected manufacturers who had won the bids to manufacture the solar water heaters. They had designed their scope of work in line with the original documents they had signed with the DOE and had invested a lot of money to deliver their orders. “With lack of clarity and communication from the department, these companies would likely close down,” said Gqada.
Isolar general manager Andre Fourie said the orders from the DOE increased as the factory capacity increased, allowing iSOLAR to grow from 15 staff in 2016, to 85 currently.
“The whole idea was, in theory, beautiful,” said Fourie.
But he said things started imploding in November last year, when they delivered their last purchase order, and no further order was forthcoming.
He said later in December the company received a letter from the DOE asking what its capacity for repair and replacement of solar water heaters was.
He believed the department were instituting the repair and replacement programme while they were “sorting out the political shenanigans”. (Former President Jacob Zuma had been outsed as president of the ANC in December, replaced by Cyril Ramaphosa, indicating a shift in power and the possibility of a looming cabinet reshuffle).
He said the repair and replace programme was also included in their tender award, so no new procurement was necessary. Briefing notes were sent, and the repair and replace programme was due to begin on 6 February. This was then moved to 22 or 23 February, then to 15 March. Then all communication stopped. “There was nothing.”
In early April they were informed the original tender cutoff date, which was 31 March, had been missed, which meant further requests for proposals related to supply, or repair and replacement, was cancelled.
Administrative staff manning the phones at the Isolar on a voluntary basis and hoping for any positive news from the DOE, said without salaries, some of their colleagues were facing eviction from houses or rooms they rented as they were not able to pay their rents. Others had used their job to extricate themselves from the drug and gang culture suffusing poverty-stricken Atlantis and were now having to sit at home all day and were being dragged back into the underworld.
Factory supervisor Jason Valentine (37) who still arrives at the Isolar factory every day despite having nothing to do, said he lived with his girlfriend in her parents’ house. As she also worked at Isolar, neither of them was receiving an income and they were all being forced to live off her parents’ pensions.
“Things are getting difficult at the house. “Mens voel nie lekker nie (a person doesn’t feel good), you eat food that you can’t pay for.”
Valentine said he also couldn’t get a loan to see them through because he didn’t know when, or if, they would get paid. Furthermore, he was expecting his first child to be born in six months.
Isolar administrators Shirmel Azure and Octavia Kotzee said the DOE still owed the company R40m for the last order completed in November. And even if new orders were placed, relationships with suppliers to whom the company owed money, would have to built up again from scratch.
Responding to questions on the NSWH at this week’s budget vote, deputy energy minister Thembisile Majola said the department was “very worried” about the seven companies but were “engaging with them”.
“We haven’t just let it go,” said Majola, “because every job loss is a concern to us.
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