Allister Sparks

Zuma's nuclear scheme is either crazy or another scam

2015-06-10 07:30

Allister Sparks

The Zuma Government has done many appalling things over the past six years, but it's latest decision, to commit the country to spending a trillion rands on six or eight nuclear power stations at a time when our economy is dangerously in decline, surely borders on lunacy.

We have just emerged from the first quarter of the year with a growth rate of 1.3% and an expanded unemployment rate of 37,8%, our worst ever. The Treasury is pretty well out of money and all three rating agencies are watching us closely, just a notch or two above "junk" status One might have thought it was time to exercise a little austerity.

But no. The Zuma regime is throwing money around like a drunken sailor, while millions of our people are struggling make ends meet. We have just seen it buy off the Director of National Prosecutions, Mxolisi Nxasana, for a cool R17-million to avoid having him revive the arms deal corruption charges against the President. It looks as though golden handshakes of this nature to keep No 1 out of jail are now an ongoing expense to the nation.

At the same time the Auditor-General, Kimi Makwetu, reported that irregular,  wasteful and unauthorised expenditure by municipalities over the past year amounted to R23-billion. It worth  note that the municipalities of the Western Cape were the only ones that did not feature in this shocking statistic.

This grotesque abuse of ratepayers' money prompted former Finance Minister, Pravin Gordhan, now in charge of Cooperative Governance, to remark that it stemmed from "pure greed," and that South Africa had a growing culture of non-payment -- an observation he might well have applied to the President's refusal to cough up on Nkandla.

The saga of Eskom's proposals to meet South Africa's energy needs goes back 17 years, to when it was first announced that the electricity supplier would develop its own pebble bed reactor. That idea fell away and in 2006 Eskom put out tenders for nuclear plants.

The costs turned out to be significantly higher than Eskom had anticipated, so the matter was delayed while an Integrated Resource Plan (IRP) for the electricity industry was drafted. Tenders were put out again in 2008, but again the prices were higher than Eskom had anticipated.

A new IRP plan in 2010 still had nuclear generation as its centrepiece, but three years later a revised plan was drawn up that moved away from it, regarding nuclear as too costly. By then a large number of new off-shore oil and gas finds around the African continent -- Nigeria, Ghana, Angola, Namibia, Mozambique, Tanzania -- offered a simpler and cheaper alternative.

Coupled with solar panels and wind turbines that looked to be a more practical solution.

Curiously, the Minister of Energy Affairs, Tina Joemat-Petterson, has never tabled that 2013 revised plan in Parliament. Instead President Zuma headed off to meet Russian President Vladimir Putin and announce some sort of agreement with him on the building of nuclear plants. Joemat-Petterson followed him to Moscow, and it appears now that several potential nuclear tenders have been lined up.

So what has happened to the 2013 proposal that we should go the cheaper and quicker African gas route?

Instead of getting clarity on that critical issue, the deputy director-general for nuclear affairs at the Department of Energy Affairs, Zizimele Mbambo, issued a statement the other day saying the number of nuclear plants the Government proposed building might now be increased from six to eight, and that some students had already been sent to Russia and China to train as nuclear experts.

So has a decision already been taken about which we, the public, know nothing?

Mbambo said the bidding price would begin in July and the preferred bidder chosen in December, and that the nuclear power stations would be built between 2017 and 2030.

He said there was no price tag on the project thus far, as this would be determined during negotiations. "We have done an investigation in terms of costs. There are a lot of innovative models that are being investigated. The programme is financeable."

Ja-well-no-fine. What we do know is that Eskom and the Government have been notorious in underestimating the costs of building nuclear power stations ever since the first tenders were put out.

What we also know is that Eskom originally estimated that the coal-fired Medupi power station it is building near Lephalale, in Limpopo Province, would cost between R60-billion and R80-billion. As it turns out, completion of the project is running five to seven years late, and the final cost is now reckoned to be somewhere between R155-billion and R300-billion.

If that is a measure of Eskom's cost estimation skills, we must anticipate a similar doubling or quadrupling of its R1-trillion estimate -- the figure first mentioned by Zuma -- for building the nuclear power stations. Or more, if eight are going to be build.

The same goes for the completion time. Nuclear power stations are much bigger, more complex and expensive to build than projects like Medupi.

Such an escalation of an already astronomical projected cost would almost certainly be enough to bankrupt South Africa.

Which is why I say the whole idea is verging on the insane. It is nowhere near affordable. One has to ask the question: What on earth is going on here?

Given the administration's record, I have to say that one dark thought occurs to me: Is this another feeding trough? A trillion rand nuclear deal would make the arms deal look like petty theft. Is that the real reason the whole deal is going ahead in such secrecy, with no details of costs or favoured contractors being disclosed to the public?

It is sad that the Zuma administration's record is so tarnished that such thoughts occur instinctively when contemplating its motives for a decision that makes neither economic nor political sense.

The only way this nuclear project could possibly be undertaken would be if Russia or China, who appear to be the favoured partners, were to provide the finance and themselves build, operate and maintain the power stations over time -- which is what I suspect Zuma has in mind.

But beware. That would amount to such a foreign entity virtually owning the power stations, giving them an enormous hold over our country. A new form of colonialism.

It would also mean that such a foreign entity would have to charge we, the electricity consumers, a rate high enough to generate a return on its enormous investment.

The amount would be punitive, leading to the acceleration of a phenomenon already beginning to show itself in this country as a result of Eskom's high rates. Individuals and companies that could afford it would start installing their own power generating plants, so forcing the foreign entity to hike its rates even higher to maintain its return on investment.

The result, as seems to be the case with just about everything the Zuma administration does, is that it would be the poor who would suffer the most.


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