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Battle for SA's R1trn nuclear contract continues

Publish date: 11 October 2011
Issue Number: 233
Diary: Legalbrief Environmental
Category: Energy

The jury is out as to whether building six new nuclear reactors in SA by 2030 at an estimated cost of R1trn is the best way to reduce the country's greenhouse gas emissions, as the world's eyes rest upon its energy policies in the run-up to the COP 17 climate-change conference later this year, writes Legalbrief.

A Mail & Guardian Online report notes that the Energy Department submitted its nuclear tender proposal to the Cabinet last month, and Energy Minister Dipuo Peters has been quoted as saying it will finalise the proposal before the end of this year. Bidding will begin next year. Dwarfing the arms deal, which is worth a mere R70bn, the report notes the contract could account for as much as 20% of the world's total nuclear spending during the next two decades. It says five companies - from France, China, South Korea, Russia and a joint US-Japanese consortium - are in the running. According to the report, government and industry sources, including those close to French manufacturer Areva, have indicated that the French and Chinese are preparing a joint bid. It says sources suggest that the combination of French nuclear expertise and Chinese financial might would make such a joint bid politically unassailable, given SA's geopolitical sympathies. Pro-nuclear campaigners in the government and industry argue that SA's new nuclear policy will secure long-term energy supply, combat climate change, beneficiate uranium deposits and create jobs. Critics have raised concerns about the affordability of the project and whether it is the most cost-effective way to secure SA's energy future. In 2009, lobby group Earthlife Africa said the building of six nuclear plants could bankrupt the country, the report states. Full Mail & Guardian Online report

Government said as the weekend it had not made a decision yet on the number of nuclear power stations that would be built or which vendors would be used for such projects, says a second Mail & Guardian Online report. 'Currently the government has not selected any design, vendor or suppliers of the nuclear power plants. No decision has been made on the actual number of power plants,' the report quotes the Energy Department as saying. Department spokesperson Ndivhuwo Khangale would not comment on how much money would be spent on the nuclear reactors. 'Until Cabinet has pronounced on this we cannot say anything about money. We'd be speculating unnecessarily,' the report quotes Khangale as saying. SA operates the continent's only nuclear power plant, near Cape Town. A previous tender for a new nuclear plant was scrapped in 2008 due to financial woes at state-run utility Eskom. The report notes that the National Union of Mineworkers is opposed to nuclear power but is reviewing its energy policies ahead of its national congress in mid-2012. Although the union has no say over who wins the tender its stance could affect how smoothly the nuclear programme proceeds. It is among the Congress of SA Trade Union's strongest affiliates and its members are likely to work on every stage of reactor construction and the nuclear fuel cycle, according to the report. Full Mail & Guardian Online report

Meanwhile, an energy expert has said that the proposed nuclear programme's cost would be much lower than R1trn. According to Phillip Lloyd of the Energy Institute at the Cape Peninsula University of Technology, the expected capital cost of government's long-awaited nuclear programme is R255.1bn. A Business Day report states that the integrated resource plan for electricity (IRP2010) has made provision for 9 600MW of new nuclear capacity in the period up to 2030. The IRP2010 makes provision for nuclear capacity to come on stream from 2023. According to report of the Electric Power Research Institute (EPRI), the 'overnight' costs for six units was R26575/kW. The six units would provide the 9 600MW required in the IRP2010. So-called overnight costs assume that the plant is built overnight and, therefore, do not include interest and financing costs, the report notes. Nuclear power company Areva has confirmed its intentions to be part of the SA nuclear programme, but declined to comment further. 'It is premature at this stage in the process to discuss any detail and the company cannot comment on potential commercial agreements or costs,' the report quotes its spokesperson as saying. Full Business Day report

Staying with energy matters, SA's R80bn renewable-energy plan was likely to draw bids for only half the 3 725 megawatts on offer by the 4 November deadline, even though developers registered interest to build seven times that capacity, Alastair Campbell, the head of power finance at Standard Bank, said in an interview last week. A Cape Times report quotes him as saying: 'Most bidders won't be ready.' Only projects that were already at a 'fairly advanced' stage when the government called for proposals on 3 August were likely to meet next month's deadline, Campbell said, according to the report. It says the full offer was expected to be met by the second bidding window, in March next year. Full Cape Times report (subscription needed)