How has South Africa come so far down the road to a nuclear power deal that could easily cripple the economy for decades to come and is so obviously laden with benefits for a clique? With so many checks and balances in place in a modern democracy, it is not easy for politicians to access state coffers. One method that has gained currency in South Africa appears to be state capture, which involves setting up companies with friends and family who successfully pitch for state contract work. Other steps are required for state capture, particularly where there are lucrative proposals for projects that are not yet in place – starting with selling the concepts to Parliamentary decision-makers. In this piece, a former insider of South Africa’s secretive Parliamentary Budget Office reveals how a combination of possible incompetence and muddying the waters around mandates appear to have played their role in adding momentum to President Jacob Zuma’s plans to develop a trillion-rand nuclear power programme for South Africa. It is a sobering reminder that the political independence and transparency of offices whose work feeds into national decision-making are essential in adding to the checks and balances designed to keep politicians in a democracy on the moral straight-and-narrow. – Jackie Cameron
By Mike Cohen
(Bloomberg) — Russia is seen as the frontrunner to win the right to build South African nuclear power plants that may be worth as much as $100 billion. With a six-month deadline to award contracts, who’s going to pay for the country’s biggest project yet remains a mystery.
Price-tag estimates for as many as eight reactors generating 9,600 megawatts, which the government wants to begin operating from 2023 and complete by 2029, range from $37 billion to $100 billion. Bids are due to start this quarter, with Russia’s Rosatom Corp. seen as a leader. Areva SA, EDF SA, Toshiba Corp.’s Westinghouse Electric Corp., China Guangdong Nuclear Power Holding Corp. and Korea Electric Power Corp. have also shown interest.
The planned investment comes as the government battles to fend off a junk-grade credit rating and the National Treasury seeks to rein in the budget deficit. Proceeding with the nuclear plants could result in a large increase in public debt, the International Monetary Fund warned in a June 24 report.
“There appears to be a simple-minded assumption that countries like China or Russia will provide cheap plants and offer finance,” Steve Thomas, professor of energy policy at the University of Greenwich in the U.K., who has monitored South Africa’s nuclear plans since 1997, said in a June 24 phone interview. “That’s an illusion.”
A study published in 2013 by the University of Cape Town’s Energy Research Centre found nuclear plants weren’t needed and wouldn’t be cost-effective for 15 to 25 years, based on a projected cost of $7,000 per kilowatt installed.
The Department of Energy’s 2013 master-plan — which the government rejected — suggested deferring a decision on whether to build atomic power facilities until at least 2025, and scrapping the option if the cost exceeded $6,500 per kilowatt of capacity. Thomas estimates current costs at about $8,000 per kilowatt installed.