Publication: Business Day Date: 2004-11-22 Reporter: Carli Lourens Reporter:

Report on Arms-Deal Offset Projects Lacks Detail, says DA

 

Publication 

Business Day

Date 2004-11-22

Reporter

Carli Lourens

Web Link

www.bday.co.za

 

The annual report on offset projects relating to government's arms deal lacks detail and is largely inconclusive, making it impossible to verify fulfilment of contractors' commitments , said a Democratic Alliance economist at the weekend.

Tim Harris raised questions on the R7,5bn in investment that is apparently outstanding this year, and amounts that are not reported on.

But trade and industry deputy director-general Lionel October said Harris's calculations were incorrect.

The annual National Industrial Participation programme report, which was released last week after a nearly four-month dela y , reviews investments and sales facilitated in nondefence sectors by large government contract winners not only arms-deal suppliers.

The report does not say how much investment or how many jobs have been created to date through arms deal offset projects .

October said the arms deal generated "the bulk" of the 7000 jobs mentioned in the report, which states arms-deal contractors are largely on track to achieve their contractual offset commitments.

The report provides limited information to support this, and does not explain how the figures were calculated, nor does it state whether projects facilitated by arms suppliers are profitable.

But it confirms speculation over the past year that the German consortium led by Ferrostaal, from which government buys submarines , lag s in offset obligations.

"The trade and industry department is concerned German company Ferrostaal is running out of time to meet its commitment," it says.

It gives no further information other than to state Ferrostaal's total obligation, which is €720m. The deadline for its first tranche of projects was in July.

October said that next month government w ould complete its assessment of whether Ferrostaal had met its July targets, and would either penalise the German company or give it an extension .

Government is under pressure for its offset programme to succeed. Its arms procurement deal, signed in 1999 for a minimum of R21bn, was criticised, but it promised the deal would bring in up to R110bn in investment, and "net jobs created should easily exceed 65 000".

It is now talking of a total figure of 12 000 jobs. A media report last week quoted a government official as saying the initial 6500 figure included direct and indirect jobs, and the "multiplier effect".

With acknowledgements to Carli Lourens and the Business Day.