Govt's space investment questioned

Microsatellite company Sunspace will lean on government to fill its order books, at an estimated cost of R100 million.

Cabinet last week approved a controversial majority equity stake acquisition in Sunspace of between 55% and 60% by government.

Minister of science and technology Naledi Pandor will provide a detailed business case for the retention of Sunspace, as it relates to the strategic imperatives of government. Pandor and communications minister Roy Padayachie will collaborate on this matter.

Sunspace developed SA's second national satellite, SumbandilaSat, which is providing geographical imaging for research purposes.

Democratic Alliance (DA) shadow minister of science and technology Marian Shinn says DA members visited Sunspace to discuss how it had successfully persuaded government to buy the major stake, rather than remain its major customer.

“They told us that Sunspace could not survive without a major investor assuring long-term financial stability and they had been unable to secure private industry funding. Without Sunspace, government would have to rely on manufacturers outside Africa, probably in the Northern Hemisphere.”

She adds that the company said potential satellite customers from the developing world and the Middle East were reluctant to sign deals with satellite manufacturers that did not have governments as major shareholders.

“We were told that once government's stake in their firm was secure the order books for satellites would start filling up and Sunspace would start to become profitable.”

Sunspace told ITWeb an investment by government would help pad its capital-intensive business.

Olivier said that, while it does need a financial boost, it would as easily accept a government endorsement as a financial investment.

“In our industry, business is usually conducted in a government-to-government manner, with the other players primarily owned and developed by governments in their countries.”

He says it takes government backing to build a reputation in the industry, and build possible contract partners' trust. “Unless government has a hand in the business, many people question the longevity of industry players,” he explains.

Shinn says there are two main problems with the acquisition. The first is that SA cannot afford to build and launch its own satellites yet and, secondly, Sunspace has failed to provide a highly successful vehicle for this so far.

“If substantial offshore and local investors have declined to become shareholders in space manufacturing, what is the compelling reason for our taxpayers to do so? We believe our developing nation cannot afford this investment, particularly with the track record of Denel and other failed state enterprises as examples.”

The shadow minister adds that the SumbandilaSat programme cost the public R90 million.

“If it cost R26 million to build and R12 million to launch, this means that about R52 million has been spent on commissioning costs and trying to correct damage caused during the launch.”

Shinn adds that public money should not be invested in a satellite manufacturing company that has been unable to deliver a robust working vehicle.

The satellite provides only 10 minutes of transmission time per day, taking it over two weeks to process usable images, according to the DA. It adds that this will be of little help for real-time disaster management that is supposed to come out of the project.

Government has not yet disclosed the exact size or cost of the stake that will be acquired in Stellenbosch-based microsatellite manufacturer Sunspace, nor has it said which budget the capital will come from.

However, the stake will be between 55% and 60% and since the acquisition of 30% of the company by the National Empowerment Fund in 2009 was valued at R50 million, government's 60% acquisition is estimated at R100 million.

The DA says this money would be better spent on key infrastructure needs. “I am not convinced that SA needs - or can afford - to build and launch its own satellites at taxpayers' expense. This is a hi-tech commercial industrial endeavour that should be funded by private investors,” notes Shinn.

“While these satellites will make some contribution to scientific research, their main purpose is commercial applications. We should rather focus our exceptionally stressed scientific funding on areas where we can exploit our unique resources, talents and opportunities to contribute to mainly addressing international health, environmental and developmental needs.”

Shinn says the budget allocated to science and technology this year is not enough for research and innovation.

DST spokesperson Lunga Ngqengelele says: “Generally, no department is ever satisfied with its allocation. The important thing to us is making sure that we use our allocation effectively and stretch it to cover as many of our priorities as possible.”

In terms of which budget will allocate the money for the acquisition, Cabinet has only said funding to keep Sunspace intact will be made available through the usual budget processes of government.