Correction of data in press release on BEE costs*

The press statement sent out earlier today*, “IRR Legal calls on Parliament to cut BEE premiums and VAT burden on the poor”, incorrectly stated the cost of BEE preference premiums in procurement.

Specifically, it stated that the estimated licit cost of these premiums, R17 billion, is roughly equivalent to the cost of new paved road construction “far enough to stretch from Cape Town to Beijing and back again”.

In processing the statement, a miscalculation occurred, arising from confusing licit and illicit costs of BEE premiums, as well as an outdated road cost figure.

For full transparency, here are the correct numbers:

Calculation 1: Estimated licit cost of BEE premiums: R17 billion.

Estimated cost of low-traffic countryside road absent premium: R7.5 million per kilometre.

Distance from Cape Town to Joburg: +-1,400 kilometres.

Cost of road construction over that distance: R10.5 billion.

Conclusion 1: licit BEE procurement premiums expected to be able to pay for new road stretching from Cape Town to Joburg annually, with R6.5 billion to spare.

Calculation 2:

Estimated total cost of BEE premiums: R150 billion.

Distance from Cape town to Beijing: +-18,800 kilometres.

Cost of that distance: R141 billion.

Conclusion 2: Total BEE procurement premiums expected to be able to pay for new road stretching from Cape Town to Beijing annually, with R9 billion to spare.

Apologies for the confusion.

Media contacts: Gabriel Crouse, IRR Legal Executive Director Tel: 082 510 0360 Email: gabriel@irrlegal.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za