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Why South Africa’s nuclear energy plan will likely fail

Why South Africa’s nuclear energy plan will likely fail

South Africa will likely fail in its quest to develop its nuclear energy capacity, according to emerging markets economist Peter Attard Montalto of Nomura.

Montalto told Fin24 that if the 9 600 MW nuclear procurement programme does see the light of day, it will be a “slimmed down programme spread over a longer period of time, given the affordability issue”.

“For this reason we need to remain calm, but vigilant,” he said. “The end point remains uncertain.”

The respected economist said he agreed with energy expert Chris Yelland’s opinion to remain calm after cabinet signed off on a gazette over the Christmas period that allowed the Department of Energy (DoE) to start the process of calling for quotes.

“We are taking small steps along a very long path through to 2030,” said Montalto.

DoE director general Thabane Zulu confirmed in a statement on December 26 that cabinet received a report back from the Energy Security Cabinet Sub-Committee in December, which had considered the work being done by both the DoE and Treasury in respect of the funding and financing of the programme.

“The decision to proceed with issuing the request for proposal will further assist in developing a funding model,” said Zulu.

The latest press release clarifies the process, explained Montalto, but said analysts are still left with the impression “that nuclear has always been more advanced than was being let on”.

“To have undertaken the framework agreements with foreign providers, we always must have had some degree of sign off like this.”

Questioning South Africa’s transparency, Montalto said the decision to gazette so close to Christmas strengthens the perception that the government has “signed non-public agreements with Russia” to award its state-owned company, Rosatom, the nuclear contract.

Rosatom prematurely announced it had won the contract in 2014, after President Jacob Zuma secretly visited Russia. It later retracted its statement and told Fin24 in 2015 that it was a public relations mistake.

“Controversy over Rosatom’s announcement intensified after a local newspaper reported Zuma personally negotiated the deal with Russian President Vladimir Putin,” AFP reported in 2014.

Regardless of these perceptions, Montalto said, there needs to be more transparency on what advice National Treasury has provided and the sequencing of their advice compared to the process of moving to tender.

“I still believe no formal sign off on affordability under any financing option has been provided by National Treasury and indeed that it remains totally unaffordable under any financing model including vendor financing,” he said.

“The next steps are likely to be murky as tenders are requested and then submitted along with financing models.

“Parliament and the courts will likely be crucial through this stage in providing transparency,” he said.

Fin24

More on nuclear in SA

SA’s nuclear procurement deal raises eyebrows

Russia ‘may have jumped the gun’ on SA nuclear energy deal

Energy Minister rejects R1 trillion nuclear build cost

R1-trillion nuclear plans are simply “disastrous” for SA


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Join the Conversation (2 comments)
  • mikethurgood

    This scheme has me concerned both on expenditure, and just how the construction work would proceed to any timescale. And I say that as a strong nuclear proponent!

    What the Russian construction capabilities and reliability are like I don’t have knowledge about, although I suppose info is available on some website. Where the French EPR is concerned, the construction at two sites, one in Finland and the other in France, have both been disastrous, for various reasons, one reason seemingly being that the design work at construction-start hadn’t even been completed! Construction time over-runs become extremely costly, too.

    I assume that a PWR type reactor will be chosen, as they are by far the most advanced type in their designs. The Toshiba/Westinghouse AP100 could, I suppose, have been well advanced if the Fukushima fiasco hadn’t added a lot more safety constraints, and for locations which aren’t even subject to tsunamis, but could be subject to relatively nearby earthquakes.

    At the moment, it remains a waiting game. But one wonders whom the government has as its prime advisor who is adequately knowledgeable about nuclear power and the latest reactor designs and safety concerns.

    South Africa will also be left in exactly the same situation as effectively every other country which run nuclear power reactors: what to do with the nuclear waste, including used fuel elements. Despite all the years that nuclear power reactors have been running, most of the radioactive waste, especially used fuel elements, remains in store under water at the various power station sites. And no one really complains!

  • the-TRUTH

    #SANuclearEnergyPlanMustFall
    #NOToSANuclearEnergyPlan

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