JOHANNESBURG — Amid all the noise around the Guptas, KPMG, McKinsey and SAP in South Africa; it’s easy to forget that there are other scandals on the horizon. Among these includes the country’s planned nuclear build which has been shrouded in mystery and alleged corruption. The Russians are fighting hard to ensure they enter SA’s nuclear market and the deal could bankrupt South Africa completely, according to the Southern African Faith Communities’ Environment Institute. – Gareth van Zyl
On Monday 9 October, the Southern African Faith Communities’ Environment Institute (SAFCEI) – a faith-based NGO concerned with the protection of the environment and poverty alleviation – confirmed that they have delivered a letter to the office of the Presidency and the Minister of Energy, expressing concerns about the potential risk of a considerable increase in the country’s debt as a result of the nuclear deal, even before it happens.
SAFCEI’s Executive Director, Francesca de Gasparis says that this added burden to the country’s debt would be due to potential investor disputes around South Africa’s intergovernmental agreements (IGAs) for nuclear.
“South Africa currently has two strategic partnership agreements relating to nuclear. These include an agreement with the Russian Federation and another with the People’s Republic of China, agreements which create a favourable regime for investors from these countries,” says de Gasparis.
“The Russian agreement in particular, creates a strategic partnership between the two states (Russia and SA) to implement the national plan for the nuclear power sector development of South Africa. This results in a special regime guaranteeing Russian investors a more favourable position than those of other nations in this sphere of the economy,” she says.
In addition to this, South Africa is simultaneously also a signatory to several other bilateral investment treaties that guarantee non-discrimination against the investors of these countries, such as China and Korea which means that preferential nuclear procurement agreements potentially violate these investment treaties.
South Africa is currently spending R162 billion in 2017/18 on servicing its national debt – more than it spends on tertiary education or land reform and almost equal to what it spends on social grants and health, respectively – while the country’s debt-to-GDP ratio now stands at 50,7% of the GDP, up from 27.8% in 2008, and rising steadily.
“We need to be sure that government fully understands the implications and costs of the nuclear deal, as well as the risk of potential investor disputes that could result from SA’s nuclear IGAs. These IGAs cover a proposed fleet of 9600 GW of nuclear power and a plethora of related nuclear business and development activities,” she adds.
“The power plants alone are estimated to cost over R1-trillion and already millions have been spent on the programme. Yet, SA still has nothing concrete to show for it. It is for these reasons that SAFCEI is asking, on behalf of South African citizens, for an opportunity to make input into the government’s decision on how these agreements are to be tabled in Parliament,” she says.
“Both the State President and the Minister of Energy need to be aware that these strategic nuclear partnerships would then expose the SA government to damages claims for discriminating against investors from other trading partners in the nuclear procurement program, should it proceed with procurement while still being a signatory to preferential nuclear agreements,” says de Gasparis.
Further to this, SAFCEI is also asking the President and the Minister to publicly state that the SA government will no longer consider itself bound by the agreement between the governments of the Republic of South Africa and the Russian Federation, on Strategic Partnership and Cooperation in the Fields of Nuclear Power and Industry 2014.
In the Earthlife Africa v Minister of Energy matter (WC 19529/15) the court set aside the tabling in Parliament of several nuclear IGAs, including the strategic partnership agreement between South Africa and the Russian Federation – which were all tabled under section 231(3) of the Constitution, rather than under section 231(2). While these agreements are not enforceable currently at the domestic level, they are still binding at the international level.
This means that signatories have undertaken to not act contrary to the intention of these agreements. Therefore, the existence of strategic and preferential nuclear procurement agreements could adversely impact the perceived impartiality of any bidding process for tenders for nuclear procurements falling under these agreements, which extend from the procurement of power stations to waste management and a host of related activities.
SAFCEI was alerted to this matter in June 2017, when it was announced that the Minister of Energy intends to renegotiate all its current nuclear IGAs, though it is unclear what form these will take in the future.
- SAFCEI is is the Southern African Faith Communities’ Environment Institute (SAFCEI) – a faith-based NGO.
Notes to Editor:
Regarding the tabling of agreements in Parliament:
- To date, nuclear agreements have been tabled under section 231(3) of the Constitution, a procedure which excludes any public input and is reserved for agreements of a technical nature.
- In contrast, tabling under section 231(2) would require approval by both the National Assembly and the National Council of Provinces, and would allow for public participation prior to such approval.
- This tabling under section 231(3) of the Constitution of nuclear IGAs between South Africa and Korea, Russia and the United States, was declared unconstitutional and set aside by the High Court in the Earthlife case.