Despite a high court ruling suspending the procurement process for South Africa’s proposed nuclear build, documents show that power utility Eskom is forging ahead with its plans regardless.
The documents, reportedly seen by Fin24 and EE Publishing, show that, while procurement processes have stopped and are being relaunched, Eskom as a developer of the project has continued to aggressively chase a state of readiness to start construction.
One of the biggest plans is to conduct research and develop a technical document on the components of a new nuclear power station that should “qualify for accelerated capital allowances”.
Eskom and South Africa’s plans to go nuclear for energy have been widely criticised by economists and analysts – and the proposal has been a black mark against the country from ratings agencies and global financiers.
The question of funding has been paramount, with the projected costs exceeding R1 trillion – a price point which South Africa cannot afford in any context.
The Eskom report itself makes mention of this, Fin24 said, stating that “the current government guarantees issued to Eskom does not provide for any investment in future capital expenditure beyond the current committed build programme.”
Speaking to CNBC Africa this week, new energy minister David Mahlobo said that the question of funding was misconstrued, and that there were many avenues open to the country to finance the project.
One example he gave was that private companies would fund the build.
However, Eskom is facing a funding crisis of its own, and has been advised to stay away from projects that could exacerbate this. The company is expected to post a R3.5 billion loss in the financial full year, while cashflow and liquidity shortfalls could mean that it will struggle to pay salaries by January 2018.
The power utility is also struggling to win over the wider public and businesses, as it seeks to raise tariffs by 20% to cover revenue losses and sales declines.
South Africa’s nuclear build has not been put on ice, and according to finance minister Malusi Gigaba remains a part of South Africa’s energy mix.
Gigaba has, however, made it clear that there is no room in the budget to finance nuclear energy for now. Mahlobo said that the plan will move ahead at a pace that the country can afford – just as it would for any other energy project.