The industrial offset programme - known officially as the National Industrial Participation (NIP) programme - has been something of a mixed blessing, the department of trade and industry (dti) acknowledges in its annual report.

While an annual report on the offsets is expected to be tabled in parliament by the end of the year, dti director-general Tshediso Matona said that the defence component had seen three of the seven "obligors" - companies with obligations to invest in programmes as a condition of their selection as suppliers for the R30 billion-plus arms deal - fall behind on their agreements.

"Each obligor has set penalty miles to reach within their fulfilment period. Should they not meet these targets, a contractually prescribed breach procedure is followed, allowing the obligor time to correct the situation," he says in the report.

The obligors are the German Frigate Consortium, MAN Ferrostaal, BAE Systems/Saab, ThyssenKrupp, Thales, Agusta/Westland and the German Submarine Consortium.

While the document does not identify the obligor that had a milestone value of €2.8 billion (R35 billion at yesterday's exchange rate), it indicated that the firm should have completed its obligations last January, but had spent only €1.1 billion.

Another firm had a contract of $1.4 billion (R13.6 billion at yesterday's exchange rate) to be completed last year, but had spent only $1.1 billion.

A third had a commitment of $652 million and had underspent by $11 million.

Recovery plans have been presented and investment plans should be implemented "shortly", according to the annual report.

Meanwhile, Matona said that the NIP had resulted in the implementation of 173 projects and the awarding of credits in excess of $12 billion. "These have led to the creation or retention of 14 000 direct jobs."

However, Matthew Stern, a director of Development Network Africa, said: "The economic commitment made in South Africa in most cases is extremely low."

With acknowledgements to Donwald Pressly and Business Report.