THE NATIONAL INDUSTRIAL PARTICIPATION PROGRAMME PRESENTATION TO PORTFOLIO COMMITTTEE ON TRADE AND INDUSTRY 17 November 2006

Background NIPP is 10 years old this year First years dominated by the Telkom rollout Thereafter the SDP’s accounted for +/- 95 % of the total programme Currently the purchases by SAA, ESKOM and the PBMR are responsible for new obligations Future obligations are those from the infrastructure plans of DPE

Main Purpose To raise investment levels and to increase international market access for South African value-added goods and services by leveraging off government procurement.

Value of the NIPP Currently the total obligation accumulates to over US$ 15 billion, of which US$4 billion is for investments Added to this is pro-active, non obligated performance equating to almost US$ 1 billion

Current Obligations SDP Other Defence Obligations GBADS awarded to Denel/Thales Non Defence Obligations Tenders awarded by SAA, Eskom, Transnet and various Government Departments

New Obligations Defence Hoefyster - Supply/delivery of new generation infantary combat vehicle products system Vistula - Logistic support vehicles Cytoon – Tactical Intelligence System (battlefield information) Kingfisher - Upgrade of MILAN missile system (anti tank) Non Defence PBMR related tenders ESKOM Power Stations Motor Vehicle Tenders Gautrain SITA related tenders

Performance of Obligors Since inception over 150 projects approved and implemented Projects in various sectors and different regions Including bio tech, aerospace, tourism and BPO These projects have generated Investment Credits in excess of US$2.2bn Exports and Local Sales Credits of US$4.5bn +/-12000 direct jobs

BAES/SAAB Performance 44 Active projects More recent projects include the Ferrochrome Smelter, Gemco and the SAAB/Denel Aerostructures deal. BAE/SAAB’s performance exceeds US$2.8 billion, of which +/- US$1 billion is for investments.

GSC (Ferrostaal) More than 11 Active projects Most recent projects include SAMES and Fabrication and Repair and Maintenance in the Oil and Gas Industry Ferrostaal’s performance exceeds €817 million, over €600 million of this for investments

GFC (ThyssenKrupp) 6 Active Projects Most recent projects include Manufacture of Wood Pellets for the energy sector, Alltube Expansion and the Mechatronics project Thyssenkrupp’s performance exceeds US$217 million

Thales 9 Active Projects Most recent projects include the SMME fund, Geratech Zirconium Beneficiation and Laroche South Africa Thales’s performance exceeds US$506 million (US$140 of this for investments)

Agusta 6 Active Projects Most recent projects include Flexider SA and Cenere 1948 Agusta’s performance exceeds US$246 million

AgustaWestland 7 Active Projects Most recent projects include Bio fuels project, Adept Airmotive and Worldfish SA AgustaWestland performance exceeds GBP 30 million (GBP 4.5 million for investments)

Denel Awarded the GBADS tender Thales assisting with this obligation Projects initiated include Qmuzik, Pre-Stressed Bars and Greenhouse Farming.

Non Defence Related Obligations SAA PBMR DEAT, SAPS, DOH, DHA and DoT Petro SA, NPA, SAPO and Spoornet Telkom SITA

Problems Encountered BAES/SAAB – Diesel Economizer BAES/SAAB – SARM Not all projects have a happy ending – some have encountered severe problems: BAES/SAAB – Diesel Economizer BAES/SAAB – SARM Ferrostaal - Atlantis Training Centre

Obligations Achieved Marpless Obligation of US$31,82 Won bid for an identification system (HANIS) to the Department of Home Affairs IP projects related to a number of export promotion projects To date they have excess credits amounting to +/-US$56,79 million

Obligations Achieved Boeing Obligation arose out out of 737-800 airplanes sold to SAA and the VIP Intercontinental transport Boeing Business Jet. Obligation amounted to US$237.5 Million. Boeing came with work packages for various SA companies. Boeing has earned credits in excess of the required obligation.

THE WAY FORWARD The SDP coming to a close R370 Billion of infrastructure development that may result in offset obligations; how are the objectives of DPE to be incorporated with those of the NIPP Denel, etc Policy revision and amended NIP guidelines