Mahlobo rushes nuclear deal

2017-11-05 06:00
David Mahlobo. (File, Netwerk24)

David Mahlobo. (File, Netwerk24)

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As Energy Minister David Mahlobo forces his nuclear power plans into action, officials at his department are working weekends to finalise the country’s reviewed integrated energy resource plan – four months ahead of schedule. 

The plan to determine the energy mix the country needs was expected to be finalised in February next year, but will now be finished in the next two weeks. 

“We would have been talking February, but now we are talking November 14,” said an insider, vouching for the level of hard work the minister was putting into his job. 

This would enable Mahlobo to make projections of the country’s future energy demands based on “empirical evidence”.

Last week, Finance Minister Malusi Gigaba told City Press that nuclear energy was neither affordable for the sluggish economy, nor immediately necessary. 

Mahlobo, who has been in his new job for just more than two weeks after three years as state security minister, is now on a collision course with Gigaba and Treasury.

The nuclear energy plan is expected to cost South Africa about R1 trillion, an amount that economists and politicians from across the spectrum – including the ANC – say the country’s struggling economy cannot afford. 

Mahlobo told City Press yesterday morning that government should not be “reckless”, but energy was central to the country’s security and shouldn’t only be treated as an economic issue.

In the opposite room, a group of senior managers waited for Mahlobo to join them for a meeting on the integrated energy resource plan.

“People who say we should not invest do not understand that, each and every day, more companies are closing down and more young people are getting out of employment and even more out of the education system. We are creating soldiers of unemployment,” Mahlobo said.

“Any responsible government will plan well because it is becoming a national security issue. One day these people would have nothing to lose and they will take this government out. The ANC must never be deterred in the face of political parties who want to stop us from implementing our programme.”

Mahlobo said much of the criticism against the nuclear project was based on an “unfounded narrative” about “who is going to win the tender”, which was none of his concern because, “if there is any procurement that is going to be done, the South African laws are going to be followed”.

The countries with the leading technology are France, Russia, the US, South Korea and China. Companies from these countries as well as their governments have been aggressively wooing South Africa’s decision-makers and working to sway public opinion their way. But many believe that President Jacob Zuma’s cosy relationship with his Russian counterpart Vladimir Putin, as well as Mahlobo’s own close ties to the Kremlin and its security establishment, has already tilted the scales in that country’s favour.

When Mahlobo’s predecessor Mmamoloko Kubayi was moved out of the department in the Cabinet reshuffle last month, there was widespread speculation that it was because she was not moving with haste on the nuclear programme.

"An energy solution"

Mahlobo confirmed his close ties with “the leadership of the Russian federation”, adding that not many people have access to the Kremlin, but he does because in his previous job they worked closely together on intelligence operations. However, he denied taking convicts-turned-businessmen Kenny Kunene and Gayton Mackenzie to the Kremlin during a recent trip to Moscow.

Mahlobo said his starting point was that “everyone in the country agreed that, for the economy to work and in order to reduce unemployment, you need to have an energy solution”. 

“In our case, we say we want to ensure security of energy and it must be sustainable. That is, you do not want to have disturbances that one day you wake up you do not have sufficient energy or you cannot be able to drive investment.”

He said that although the affordability of the project was a “big issue”, the need for extra energy was genuine and legitimate.

South Africa uses both renewable and nonrenewable energy sources, and the sector contributes directly and indirectly more than 33% of gross domestic product. Other energy sources in the mix include coal, gas, water, solar and wind.

Mahlobo said “the principle of pace, scale and affordability applies to the entire energy mix”.

“The starting point is that we do not have energy that we can guarantee for future generations because it is finite. Whatever source you choose, you must be able to say at what scale, which is the volume you want or the demand met,” he said.

He said that projecting future energy demand for economic growth was “a function of saying who is going to take this energy up like industries, private sector and domestic usage”.

Mahlobo said building nuclear power stations created new industries because it was capital intensive and would take more than 10 years to build.

“Yes, it is expensive when you are building, but immediately [after] a nuclear plant has been built and [has started] to operate, it produces the cheapest electricity than any source. It is actually less than 35c per kilowatt hour, which is very cheap. The renewables are on average around 80c per kilowatt hour, and some are around R1.”

He said the technology in nuclear reactors had also improved and would reduce emissions. “Plus we have a good track record because we have never had reports that Koeberg [Nuclear Power Station in Cape Town] has caused problems in terms of safety and issues of environment,” he said.

Mahlobo said his approach would be informed by a “build, operate, train and transfer” model whereby if government did not have the funds to build it, it would go to the market seeking an investor who would build at their own risk.

“When operations start then government comes in. The investor will want to recoup the investment and make gains. Government then operates on the principle that the cost should not be passed to the end user, and it does so by setting the tariff.”

Mahlobo said it was critical to get the projection figures right to avoid costly mistakes, and the margin of error must be less than 15%.

“The growth of the economy must be our preoccupation and areas of growth must be chosen very well,” he said. 
“We will always work with experts because I do not possess all the wisdom. There are people who have been there and they have seen it working.”

Mahlobo said he had no desire to see the country borrow money to fund the nuclear project.

“My first intention is to say who has the appetite to put the structure on the ground and they take the risk,” he said.

Eskom spokesperson Khulu Phasiwe said if the integrated energy resource plan showed the nuclear programme could go ahead, they would begin the tender process immediately.

Read more on:    russia  |  anc  |  david mahlobo  |  nuclear deal

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