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The nation breathed a collective sigh of relief when the government appeared to back down on plans to build nuclear power plants any time soon. But Eskom’s new acting CEO Matshela Koko has moved quickly to get the build back on the agenda. He would like to start the process to identify project participants before the end of the year, with nuclear power plants up-and-running within the next decade, Fin24 has revealed. The nuclear power plan has proved controversial for a number of reasons: firstly, the amount of money involved in developing the programme is so huge it could damage the economy; secondly, the plans first came to light after it emerged that President Jacob Zuma had been in secret talks with Russia to do the work. While Russia and its agency Rosatom have denied that there have been any irregularities in their dealings with South Africa about the build programme, it’s hard not to be cynical about what has gone on behind-the-scenes. The state capture report released by former public protector Thuli Madonsela pointed to the widespread abuse of state funds and the involvement of foreign parties in the control of state entities. Power utility Eskom featured prominently in the report. So far, there has been no concerted action to fully investigate the allegations. Koko replaces Brian Molefe, who resigned after disgracing himself with bizarre statements about a shebeen in Saxonwold in order to deny he was visiting the controversial Gupta family who live in the leafy suburb. But Koko is no saint; he has also had links to an irregular Eskom deal highlighted in the state capture report. The fact that the nuclear build programme is back on the table, and that there is a sense of urgency to get it moving, points to the worrying possibility that state capture doesn’t only extend across the public sector – it runs deep within institutions. – Jackie Cameron
By Matthew Le Cordeur
Cape Town – Despite a draft energy plan that sees nuclear energy being delayed by over a decade, government and its state-owned entities (SOE) are gearing up to release the request for proposal (RFP) for the 9.6 GW nuclear build programme.
Acting Eskom CEO Matshela Koko last month pledged to release the RFPs by the end of the year, and this could happen as soon as next week.
“It is very important for us to go into the market so that we are able to go back to give Cabinet what the best rollout is, including localisation (and) … funding options,” he said. “It’s quite important that we do that, otherwise, we keep guessing.”
Eskom and Necsa, the SOEs who will share duties as owner, procurer and operator of the nuclear plants, require the RFP to be approved by their boards before it is submitted to Cabinet’s energy security sub-committee for recommendation and then signed off by Cabinet.
With this week’s Cabinet meeting being postponed due to the funeral of Cuba’s former leader Fidel Castro, the sign off could take place next week, following which the Energy minister should announce the release.
This would then come ahead of the Department of Energy’s court case with environmentalist groups Safcei and Earthlife SA, who will meet it in court on 13 and 14 December over the procurement process.
The environmentalists outline in court papers how non-transparent the process around the nuclear procurement has been. “The section 34 determination to procure nuclear energy was taken in 2013 and kept secret until gazetted in December 2015,” they claim.
The release of the RFPs would also come ahead of the finalised Integrated Resource Plan (IRP), after the draft energy plan was released for public comment last week.
The draft IRP put a major spanner in the works for the nuclear sector, after the base case recommended that the requirement for new nuclear energy shift from its current 9.6 GW by 2030 to about 1.4 GW by 2037.
Energy experts who view renewable energy as the way forward said the assumptions were skewed politically so the results could include nuclear, which they claimed should have been completely excluded.
However, the nuclear industry was also taken aback by the slowdown of adding new nuclear.
One of the main bidders, Rosatom told Fin24 on Wednesday that it “acknowledges the release of the latest draft” of the IRP and “respects South Africa’s domestic policy debates and decisions”.
“Although we are unable to comment on government decisions, we remain an interested bidder for the nuclear procurement programme in South Africa,” Viktor Polikarpov, head of Rosatom in Africa, told Fin24.
He re-emphasised that Russia nor Rosatom had not signed any secret deal or paid any bribes, as alleged by some critics. “We are ready to provide our full support to any country embarking on a path towards nuclear development,” he said.
However, the draft IRP came as a shock to Necsa.
“There appears to be some very strange assumptions made by the DOE in this surprising proposal,” said Necsa chairperson Kelvin Kemm. “Quite frankly I cannot take it seriously. I am extremely disappointed that the DOE did not see fit to consult Necsa.”
Eskom & @koko_matshela's hypocrisy in punting stringent carbon budget constraints to push their nuclear ambitions foward defies belief.
— Chris Yelland (@chrisyelland) November 25, 2016
“Nuclear power is so clearly the way to go, that the DOE proposals are surprising to say the least,” said Necsa CEO Phumzile Tshelane. “I can’t see the logic in their ideas.”
Koko told media during the draft IRP press conference that Eskom would still push for nuclear to start going online in 2025.
“The real debate we will have is the one that says: ‘Do you have a carbon budget or not?’ And if the answer is yes, then you will need a reactor operational by 2025,” he said.
“To have a nuclear reactor operating in 2025, you need a 10-year lead time, which will start now. Otherwise you will end up in a situation where you were when we ended up in load shedding.”
S&P lowers Eskom's rating deep into junk. But Eskom still lies says can afford new nuclear stations? Decisions taken at Saxonwold Shebeen
— SikonathiMantshantsh (@SikonathiM) November 26, 2016
Energy Minister Tina Joemat-Pettersson was surprisingly quiet during the briefing, but came out with a press statement this week supporting Koko’s nuclear vision.
In a press statement published in Business Report on Wednesday, she said “preliminary results from the carbon budget scenario indicate a significant change in the energy mix and timing, with increased renewables, no new capacity from coal, and nuclear coming online around 2026”.
“This is a most likely scenario given that renewable energy cannot be unconstrained,” she said. “This is because there are network constraints that will limit the extent to which renewable energy can be connected to the electricity distribution grid.”
It also comes as Public Enterprises Minister Lynne Brown told Parliament that Eskom’s transmission constraints meant signing new renewable energy power purchase agreements could affect the utility’s balance sheet.
“The current capacity being added on the grid is based on the IRP 2010, which projected higher demand for electricity based on the economy growing close to 6%,” she said in a written reply.
“This means that we are currently adding on capacity to the grid at rate higher than what is required. The biggest risk with having too much capacity is what happens to the plants that will potentially become stranded.”
“The current trajectory will potentially be detrimental to consumers and it is critical that the IRP is concluded so we can have plan that offers maximum protection for consumers.”
While the draft IRP calls for a delay in nuclear, the signals from government are clear that they would prefer to see the procurement process of new nuclear unfolding as soon as possible.
The DoE said the IRP would be finalised by March 2017. If it goes Eskom’s way, then it could likely award the official nuclear tender shortly afterwards.
The court battle with the environmentalists could likely spill over into 2017, meaning this will be a major year for the future of nuclear energy in South Africa.