Nuclear excess – DA says Energy Minister misleading projected costs, funding

by Gordon Mackay*

Tina_Joemat-PettersonThe Minister of Energy, Tina Joemat-Pettersson, said in parliament that “…Government has not determined or pronounced the cost of the 9.6GW Nuclear New Build Programme”.

This is in stark contrast to comments made by both Eskom CEO Brian Molefe and Minister Joemat-Pettersson’s right hand man, the Deputy Director-General for Nuclear Energy in the DoE, Zizamele Mbambo.

At a media round table discussion on energy last week, Eskom CEO Brian Molefe openly referred to the much denied R1 trillion figure when discussing the cost of the nuclear new build programme. Molefe is not the first senior figure in government to refer to a cost figure despite the Minister assuring the public that no cost has been determined.

Molefe is joined by the Deputy Director-General for Nuclear Energy in the DoE, Zizamele Mbambo, who revealed at a media briefing at Zimbali resort in July this year that the overnight cost alone is estimated at around R500 billion.

“The current world experience for quoted numbers for real export would indicate an overnight cost of around $5 billion per 1,200MW, which is equivalent to $4,200 per kilowatt per reactor in newcomer states”, he said.

This translates into R500 billion for 9.6GW at current exchange rates. However, R500 billion is a conservative estimate of the minimum overnight costs, and excludes all operational costs such as the cost of infrastructure development, transmission infrastructure, decommissioning the nuclear power plants, skills development, and nuclear waste management.

Construction cost estimates have increased in virtually all countries with build programmes currently under way, and almost 75% of new nuclear build projects across the world are behind schedule, including those in Finland and France.

Read Also: DA questions $100b nuclear financing – Treasury gets late call up

Moreover, the currency risk exposure and difficulties in assessing the cost of the working cost of capital required to fund nuclear new build are invariably difficult to calculate and beyond the power of the government.

In her reply, the Minister stated that the final estimated cost would include all such operational costs alluded to above. Thus by the Minister’s own submission, the real estimated cost is therefore far in excess of the DDG’s estimate of R500 billion, and much closer to the R1 trillion figure.

Yet again, the Minister is purposefully misleading the public as to the cost of the nuclear deal. Figures alluded to by these senior individuals from Eskom and the Department of Energy are in line with international publicly available reports which unequivocally indicate that the eventual cost will be around the R1 trillion figure which the Minister so vehemently denies.

*Gordon Mackay is the Democratic Aliiance Shadow Minister of Energy