Energy minister Tina Joemat-Pettersson has told Parliament that South Africa’s ambitious and controversial nuclear energy plans will be entirely funded by Eskom, with no money coming from National Treasury.
The minister was briefing Parliament’s energy oversight committee on Tuesday.
The process around South Africa’s nuclear plans, which will see 9,600MW of nuclear power added to the grid, has been a mysterious one, where the DoE has not revealed any of the details surrounding the project – including its cost.
Conservative estimates have put the build at R500 billion, while experts have noted – taking into consideration the country’s much-delayed Medupi and Kusile power station builds – that costs may balloon to well over R1 trillion.
According to Joemat-Pettersson, Eskom will fund the entire build off its own balance sheet, and the funding process will be handled in the same way as the Medupi and Kusile projects.
No funds will come from Treasury or the fiscus, she said, with Eskom turning to global markets to raise money it needs.
Eskom’s handling of Medupi and Kusile have drawn much criticism as both projects have seen massive delays, labour issues and come in billions of rands over budget.
Medupi, which saw its first unit go online in 2015, will see its final unit go live only in May 2020. and is expected to have cost R300 billion to build. The projected was budgeted for R69 billion when it commenced in 2007. It was initially planned to power up in 2011, before being delayed to 2013.
Kusile, meanwhile, is expected to be fully live by September 2022. The first unit from Kusile is expected to go live in July 2018.
DA shadow minister of energy, Gordon Mackay, said that Pettersson’s announcement “is nothing short of an elaborate sleight of hand aimed at muddying the water and subverting effective parliamentary oversight over the R1 trillion nuclear deal”.
Mackay said that in designating Eskom as the procuring agent for the nuclear new build the following must be considered:
- The tender will be subject to Eskom’s board tender committee, the very same tender committee found to be corrupt by the Supreme Court of Appeal.
- The tender will be subject to internal Eskom processes, effectively shielding the nuclear deal from direct parliamentary oversight.
- A nuclear deal not directly subject to parliamentary oversight will cost more and be subject to greater levels of corruption, in the same way as Kusile and Medupi have been with regard to their association with Hitachi.
- While tax payers will not be directly liable for the build costs of the new build programme – like the costs of Kusile and Medupi – they will be passed onto consumers via higher electricity prices. Higher energy costs will kill economic growth and jobs.
“Far from providing much needed clarity and assurance, the Minister has created greater uncertainty and has all but ensured that Zuma and his cronies will enrich themselves at South Africa’s expense,” the DA’s energy lead said.