Cabinet officially approves nuclear plan

Cape Town - A Government Gazette notice released by the Department of Energy on December 21 has confirmed Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme.

This means the department can now call for quotes for the tendering process to begin.

However, the process is far from complete, according to energy expert Chris Yelland. "I believe there is still a long road ahead before commitments can be or are made in the form of contract awards for a nuclear new-build," he tweeted.

He said the process still required a detailed cost/benefit analysis by the Department of Finance, as well as an update to IRP2010-2030 that still needs to be done. "Request for proposals must still commence; shortlisting of vendors and final bids from shortlisted vendors must be recorded."

Russia, China, France and South Korea, Canada and Japan are all vying to win the main nuclear contract, while there are also opportunities for local companies to win contracts for various infrastructure and construction tenders.

The above countries, excluding Japan and Canada, signed intergovernmental agreements this year ahead of the tender process. The two outstanding countries were planning on signing these agreements too.

Until this point, there has been no official word from government that it had decided to move ahead with the programme. Finance Minister Pravin Gordhan, however, indicated in his opening address as minister that government would proceed with a formal procurement process, only if it was affordable.

Business Day reported on December 14 that Cabinet approved the decision to go ahead just hours before Nhlanhla Nene was removed from his position as finance minister on December 9.

Fin24 checked with Cabinet following the news report, but acting Cabinet spokesperson Phumla Williams said she was not aware of this.

Analysts believe Nene was ousted for stalling the nuclear build programme, saying it was too expensive in the current economic climate.

He had allocated R200m in his mini budget this year for the Departments of Energy and Finance to investigate the costing of the programme. There were no indications of this having produced any results.

Meanwhile, an environmental impact assessment (EIA) report by Eskom that has recommended Thyspunt as the preferred site to build a 4 000 MW nuclear power station is almost complete and will be submitted to the Department of Environmental Affairs in February 2016, said Deidre Herbst, Eskom’s environmental manager, on Thursday.

The Gazette notice released by Energy Minister Tina Joemat-Peterson, in consultation with the National Energy Regulator of South Africa, said her department would be the procurement agency. This was initially going to be Eskom’s responsibility, but was moved to the department earlier this year.

“The role of the procurement agency will be to conduct the procurement process, including preparing any requests for qualification, requests for proposals and/or all related and associated documentation, negotiating the power purchase agreements, facilitating the conclusion of the other project agreements, and facilitating the satisfaction of any conditions precedent to financial close which are within its control.”

The Gazette states that the electricity must be purchased by Eskom “or by any successor entity to be designated by the Minister of Energy, as buyer (off-taker)”.

It says the electricity must be purchased from the “special purpose vehicle(s) set up for the purpose of developing the nuclear programme".

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