Eskom unveils plan to pay for nuclear power plants

The government is clearly determined to press ahead with plans to build nuclear power plants. Eskom executives are on a public relations campaign to allay fears that the programme will bankrupt South Africa. The bosses of the state power utility claim the organisation will have about $11bn, or R150bn, available to cover the costs. They are also convinced that they can manage the schedule and costs to keep the project within budget. But, with the controversial Gupta family – linked to the Zuma family – circling the lucrative deal and discussions with Russia held in secret, few will believe that Eskom’s campaigners have the nation’s best interests at heart. Groups pushing for the nuclear build to be shelved are unlikely to be assuaged by Eskom’s charm offensive. A High Court hearing has been set for 13 and 14 December, with the Southern African Faith Communities’ Environment Institute and Earthlife Africa Johannesburg challenging the legality of the nuclear build deal and demanding transparency from government. – Jackie Cameron

By Ana Monteiro

South Africa’s state-owned electricity utility forecasts it will have more than 150 billion rand ($11 billion) in 10 years’ time, money it could use to fund the country’s proposed plan to build nuclear power plants.

Eskom Holdings SOC Ltd.’s stronger financial and operating performance will continue improving, culminating in the excess cash resources by the 10th year of the company’s 2016-17 operating plan, Group Generation Executive Matshela Koko wrote in an opinion piece in Business Day newspaper on Friday. It has also increased its borrowing program by 90 billion rand to 327 billion rand, he said.

An Eskom branded flag, right, flies alongside the South African national flag outside the headquarters for Eskom Holdings SOC Ltd., South Africa’s state-owned electricity utility at Megawatt Park in Sandton, near Johannesburg, South Africa. Photographer: Waldo Swiegers/Bloomberg
An Eskom branded flag, right, flies alongside the South African national flag outside the headquarters for Eskom Holdings SOC Ltd., South Africa’s state-owned electricity utility at Megawatt Park in Sandton, near Johannesburg, South Africa. Photographer: Waldo Swiegers/Bloomberg

South Africa last year approved a plan for the country to develop as much as 9,600 megawatts of nuclear capacity by 2030. Critics of the nuclear power plan, which could cost as much as $100 billion, say it’s unaffordable. Eskom’s revenue has increased every year since 2006 as the nation’s energy regulator allowed it to raise prices by an average 16 percent annually, or more than double the mean inflation rate of 6.1 percent over the 10-year period.

The utility is building new electricity stations to end the power cuts that were imposed for about 100 days last year, curbing growth in Africa’s most-industrialized nation. Its Medupi and Kusile coal-fired plants under construction will cost a total of 306 billion rand; both have run over budget and are years behind schedule.

Lessons Learnt

“Eskom believes it has learnt a wealth of lessons from its current new-build program, which it can put to use in the nuclear program to reduce the risk of schedule delays and cost overruns,” Koko wrote.

The nuclear program “will be delivered at a pace and a price that South Africa can afford,” Koko said, adding that the program will be “designed to cost.” The so-called targeted levelized cost will be 1 rand per kilowatt-hour, which would make it an affordable option for continuous power supply “even compared to the best estimates for renewables and gas,” he said.

The algorithm that was used to build Koeberg, South Africa’s only nuclear power plant, will be used to ensure that the new facilities are designed “to cost,” he said. Construction of Koeberg, outside Cape Town, started in 1976 and it was operational in 1984.