Response Letter to Collusion Allegations

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26 January 2010
To Whom it May Concern:

I am the GM of a respectable player in the solar industry, and would like to be first in line to stomp out any collusion or price fixing, however I have serious questions to the accuracy of the claims. The mere fact alone that there are currently so many companies offering solar services means that this industry is highly competitive, and that home owners are smart enough to get multiple quotes before selecting their solar water heating provider of choice, and that price is always the first and most important factor considered.
In response to Deputy Director Aphane’s allegations on collusion in the solar water heating industry, I have the following questions:
1. Can Mr. Aphane provide some actual figures to substantiate his claims.
2. Is the 40% an average across all types of systems, or does it refer to a specific type system, systems from a specific country of origin, or systems all using a particular component which may have increased in price?
3. Does the 40% mentioned include the cost of additional requirements (SABS testing & Mark requirements, controller/timer supply & installation, relevant association membership fees, certificates of compliance etc), all required by Eskom in order for systems to qualify for the DSM rebate, or is it over and above?
4. Does the 40% take into account the fact that the price of copper has increased 35%, from around $7000/t in 2008 to around $9500/t in 2010, and the significant knock on effect for all solar and plumbing components because of this, or is it over and above?
I can understand that the prices are higher in South Africa than overseas as our market is still very small and unit pricing is function of sales volume – this is a major concern for us and is already being addressed with the advice and assistance of industry partners from overseas.
While I can certainly confirm that my company is NOT involved in any sort of price fixing, I am concerned that these statements, without substantiation and/or specific offenders mentioned, will lead to negative press and effects for the whole solar industry, when the reality is that people have been working incredibly hard to help government achieve its targets.

Best Regards,

James Shirley
General Manager
Kayema Energy Solutions