POWER SUPPLY: Eskom's Water Heater Fiasco
Recent Western Cape Business News
“The idea of the subsidy was a good one but, unfortunately, it had more to do with Eskom’s public relations efforts than the development of an important industry,” said Michael Bagraim, President of the Chamber.
If the subsidy had been limited to local products the industry would have grown, new jobs would have been created and costs would have come down as economies of scale improved.
Instead the subsidy encouraged new entrants to the market to import expensive equipment and to sell the product to the more affluent householders. This consumed most of the subsidy while the mass market was neglected.
At the same time local manufacturers were asked to have their products tested and approved by the SA Bureau of Standards at great cost. “Many of them had been making good solar heaters for years and the new requirement simply created red tape and added to their costs while Eskom subsidised their new competitors.”
The result was that a great opportunity to support and develop a local manufacturing industry was lost.
“Most countries go to great length to create non-tariff barriers to protect local manufacturers but we did exactly the opposite. We subsidised the imported products and made our own manufacturers pay to jump through new hoops,” Bagraim said.
He said the Chamber had called for the subsidy to be used only for local products and for a National campaign to promote solar water heaters. “Eskom should never have been involved. Their job is to sell electricity not to help people buy less of it. ”
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