CAPE TOWN (Reuters) - South Africa intends buying antiretroviral (ARV) drugs at the lowest prices, even from foreign companies, despite opposition from local drugmakers, the health minister said on Tuesday.

South Africa -- where an estimated 1,000 people die each day due to AIDS-related complications -- has the world's largest ARV programme as it tries to combat one of the globe's highest HIV/AIDS caseloads. At least 5.7 million out of a population of 50 million are infected with HIV.

A regimen of ARV drugs can prolong the life of those diagnosed with the incurable disease that kills millions each year.

"The prices that South Africa pays for ARVs are significantly higher than all other countries," Minister of Health Aaron Motsoaledi told parliament during his budget vote speech.

"This just does not make sense. We must be able to purchase ARVs at the lowest prices as we are the largest consumers of ARVs in the world and must benefit from economies of scale," he said, without indicating what prices were paid.

The Treatment Action Campaign (TAC) -- part of a global drive to increase access to ARVs and reduce its cost to developing countries -- said South Africa has paid hundreds of millions of rand more to purchase drugs that could be sourced cheaper on the international market.

Mark Heywood, an executive member of the TAC, told Reuters that after the finalisation of ARV supply contracts, the prices of several drugs, such as Efavirenz, dropped significantly but the government continued to be locked into the tender prices.

Motsoaledi said attempts to reduce the ARV prices and introduce new tender specifications had already generated opposition from some local pharmaceutical manufacturers who claim the approach will lead to job losses.

"There is no choice. We must purchase ARVs at the lowest possible cost from whatever source that can guarantee us the lowest prices, whether inside or outside the country," Motsoaledi said.

Shares in the country's top drugmakers Aspen Pharmacare, Adcock Ingram and Cipla Medpro have risen 12-30 percent since South Africa announced a new approach to AIDS last year, although analysts say they are unlikely to raise big profits from the plan as activists lobby for lower prices and greater competition.

South Africa has a 7 billion rand plan to expand HIV/AIDS treatment as it seeks to ramp up access to 80 percent of those living with HIV/AIDS and reduce the number of new infections by 50 percent by 2011/12.

Motsoaledi said unless decisive action was taken, South Africa will not overcome the burden of HIV/AIDS.

"This is why the new ARV tender specifications will be prepared in a way that opens the way for us to purchase ARVs at the lowest possible price. I will not compromise on this," he said.