Electricity price hikes to fund R1 trillion SA nuclear build

 ·2 Jun 2015
Eskom power money

The Democratic Alliance says that the Department of Energy (DoE) aims to fund its R1 trillion nuclear programme with electricity tariff hikes.

The DoE and the South African Nuclear Energy Corporation (NECSA) appeared before the Portfolio Committee on Energy on Tuesday (2 June) to brief it on the Nuclear Build Programme.

Energy Minister Tina Joemat-Pettersson recently said that South Africa will start a nuclear build programme in 2015, in a bid to generate an additional 9,600MW of electricity.

The country will have six new nuclear power plants by 2030, which will cost between R400 billion and R1 trillion to build, according to a report by Reuters.

“From today’s briefing it is clear that government has brazenly chosen to pursue the nuclear build despite it being fraught with financial and infrastructural limitations,” said
DA Shadow Minister of Energy, Gordon Mackay.

“Of great concern are the cagey and evasive responses provided by the Department on the proposed financing models for what will be SA’s most expensive public procurement process ever,” he said, noting only a single slide in the presentation providing information on the projects funding.

“In the slide it is suggested that the DoE, through Eskom, intends to finance this programme by way of ‘tariff recovery at early stages’ – also known as the Medupi/Kusile model where the consumer carries the cost of the new build through tariff increases.

“From this information, one can only conclude that the DoE intends to fund the nuclear programme through massive electricity price hikes,” the shadow minister said.

The National Energy Regulator (Nersa) is set to make a decision whether it will authorise Eskom’s application to hike tariffs by 25.3% on June 29, 2015.

“This will inflate the cost of running a business, cause widespread job losses, and make electricity unaffordable for many South Africans,” Mackay said.

He said that at an estimated cost of R1 trillion before cost over runs, the choice to go nuclear “is nothing short of absurd”.

Minister Joemat– Pettersson’s announced in her budget speech a week ago, that her Department will begin with the nuclear procurement process in the second quarter of this financial year.

The Minister expects to present the outcome of the procurement process to Cabinet by year end.

“Considering South Africa is not close to being ready to roll out nuclear to the public, Minister Joemat-Pettersson’s apparent insistence and haste is alarming and, frankly, irresponsible,” the DA said.

The DA said it is primarily concerned with the impact of the proposed Nuclear Build Programme on SA’s potential economic growth as well the impact on the long-term electricity pricing path.

More on Eskom and SA electricity

Eskom power constraints a major concern: Reserve Bank

SA’s R1 trillion nuclear power plans

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