The Valve and Actuator Manufacturers Cluster of South Africa (Vamcosa), which operates under the auspices of the South African Capital Equipment Export Council (Saceec), on Tuesday announced that the National Treasury had published an updated instruction note stipulating the minimum threshold for local production and content for valve products and actuators.
The updated instruction note provided clarity on certain topics, such as how local content should be calculated and what constituted local content. It also provided some protection for major suppliers such as foundries, forge shops, steel and stainless steel suppliers.
Providing clarification on what the 70% local content comprised, the note included the use of locally produced and certified castings, forging and fabrication, as well as verifiable manufacturing activities such as machining, drilling, coating, assembly and testing.
“The first instruction note came out in 2014. It had many loopholes in it and did not stipulate how the 70% local content should be adhered to,” said Vamcosa member Mark Wilson.
He added that Vamcosa, together with the Department of Trade and Industry, worked to change the instruction note, which was issued last month, and specifically focused on clarifying how local content was made up.
“This most recent note clearly states what the criteria for local content should be,” he said.
Saceec CEO Eric Bruggman added that, currently, there was no penalty or consequence for State-owned companies that did not procure enough local content.
“Currently, 20% is local and 80% is imported and we are hoping to change that,” he noted.
The updated instruction note stipulated that the averaging-out of local content either across any number of valves and gearboxes and actuator combinations, as well as locally made and imported valves or other items, was not permitted.
Each individual valve, manual actuator or pneumatic actuator was subject to the minimum 70% local-content threshold.
In addition, the valve type list had been updated to include the alternative names of valves.
“For example, a check valve is also known as a non-return valve or reflux valve or tilting disk valve, and so on. This [list is aimed at curbing] the number of State-owned entities, departments – including municipalities – and contractors working with State spend, who assume that by changing the name of the valve in the tender or request for information process, that designation does not apply,” concluded Bruggman.