On 4 October 2021, the Acting Chief Procurement Officer at National Treasury issued a circular stipulating a minimum threshold of 100% is to be implemented on local production and content in the cement sector.

This means that from 4 November all public contracts must advertised with the specific condition that only locally produced cement may be used under the contract.

The Preferential Procurement Regulations of 2017 (“PPR”) make provision for the Department of Trade, Industry and Competition (“DTIC”) to designate sectors in line with national development and industrial policy, such as for example the Master Plans, for local production.

The Bid Specification Committee will from now on insert the requirement of a minimum threshold of 100% local production and content for cement into the invitation to the public to tender. If this condition cannot be satisfied, additional options exists such as approval and authorisation, which in practice would likely amount to the same. A final issue worth mentioning is that the PPR under which the designated was made are due to become void two days before the designation takes effect, on 2 November 2021. This is because of the decision by the Supreme Court of Appeal in Afribusiness NPC v Minister of Finance 2021 (1) SA 325 (SCA), which is currently under appeal to the Constitutional Court (“CC”), but no judgment has been handed down.

Need to know more about designation? Drop us a line at info@xa.co.za

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