DA believes Joule electric best served by private investors as it enters commercialisation phase
DA believes that innovation in South Africa best served by enabling innovative companies access to capital by encouraging venture capital funds
Reply to DA question reveals further requests of a further R300 million more public money for Joule electric car
The Democratic Alliance (DA) questions whether the public need further fund the commercial development of South African developed electric car, the Joule. We understand that the Department of Trade and Industry (DTI) is considering an application from Optimal Energy - developers of the car - for a further R300 million.
This was revealed in a reply to a parliamentary question I asked of the Minister of Science and Technology Ms Naledi Pandor.
The development of the car by Optimal Energy, a privately owned company whose startup has been funded by the Department of Science and Technology (DST) and the Industrial Development Corporation (IDC), started in 2005 - and has so far cost the state R105 million via the DST's Innovation Fund (which has now been incorporated into the new Technology Innovation Agency), with a final payment of R23-million to be made by the end of August 2010.
This R128-million is the largest investment the DST made through the Innovation Fund and TIA, and questions need to be asked how the amount was allowed to escalate over the fund's previous ceilings for investments of this kind, and what the return on this investment will be for the taxpayer. The handover of the project from DST to DTI is in terms of the DTI's 2010-2013 Industrial Policy Action Plan. IDC has invested R80-million into the Joule project, pushing the pre-commercialisation total costs of the vehicle to R208 million.
While South Africa must encourage the commercialisation of its innovations, we need to encourage the introduction of private investment into the commercialisation and development of industry from our innovations. The DTI's deep pockets on this project come months after Cabinet's decision to invest about R100 million in commercial satellite manufacturer Sunspace that has, after nine years in operation, failed to find a significant shareholder to secure its long-term viability. Questions must be asked as to why South African state-funded innovative enterprises fail to raise private-sector investment, and whether these ‘investments' are indeed the best spend of public money when the pressure for developmental and infrastructure spend is significant.
It is the DA's position, and indeed in our policy, that such a model should be followed by the Minister, in that she should create a business-friendly climate, helping innovative companies gain access to capital at every stage of their growth by encouraging venture capital funds.
Two memoranda of understanding have been signed with private firms to explore parts of the production process of the vehicle but nowhere in sight are any investments by the companies that stand to capitalise most of the roll-out of electrical vehicles and that is the implementers and owners of the battery-charging/replacement infrastructure. While we support the initiative to develop an electric car and commend the achievements of Optimal Energy to this point, we have to question whether it is not time for private investors to step up to the plate as the vehicle enters its commercialisation phase.