Eskom gets lead role in state's new nuclear masterplan

Cape Town – Energy Minister Tina Joemat-Pettersson will be making a recommendation to Cabinet that it becomes the overarching coordinating body of South Africa’s nuclear build programme, and no longer its procurer. That will become Eskom's job.

In a parliamentary briefing document, the Department of Energy (DoE) said it would recommend to Cabinet that Eskom should procure the build programme, while the Nuclear Energy Corporation of South Africa (Necsa) should be responsible for procuring the fuel cycle and multi-purpose reactor.

The department told Parliament's Portfolio Committee on Energy that it would recommend it becomes the “programme coordinator” of the nuclear build plan.

Joemat-Pettersson’s announcement is an "elaborate sleight of hand aimed at muddying the water and subverting effective parliamentary oversight" over the nuclear deal, according to Democratic Alliance MP Gordon Mackay.

"The tender will be subject to Eskom’s board tender committee, the very same tender committee found to be corrupt by the Supreme Court of Appeal," he said in a statement on Tuesday.

The announcement confirmed suspicions that the implementation of the nuclear build programme would shift to Eskom and not the DoE as had originally been planned.

Fin24 reported that early indications showed that Eskom could become the main implementing authority, while Necsa would also play a bigger role in the process. Necsa chairperson Kelvin Kemm told Fin24 at the time there were clear indications that Necsa would play “a major role as the primary nuclear centre” of South Africa.

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On Tuesday, Eskom’s head of generation, Matshela Koko, told Parliament's Portfolio Committee on Energy that the power utility would be able to fund nuclear power from its balance sheet.

In a letter in Business Day, he previously remarked that there had been a significant improvement in Eskom’s finances and improved revenue emanating from a better operating plant and the completion of the build programme.

He emphasised on Tuesday that Eskom will have cash balances in excess of R150bn and that these cash resources could be deployed to fund the new nuclear build programme. He added that Eskom’s 2016/17 corporate plan has significantly increased the borrowing programme of Eskom to R327bn.

Joemat-Pettersson told the committee that South Africa's sovereignty would not be at stake in the nuclear deal, which has been estimated at about R250bn, with critics claiming it could cost over R1trn, and that the fiscus would not fund the build programme.

Coal new build sees time and cost overruns

Eskom's procurement and funding of two coal power stations - Medupi and Kusile - became a major headache for the country, as time and cost overruns derailed the power utility's plan to have enough electricity capacity for South Africa.

The power stations will deliver 9.6GW of power, just like the planned nuclear build. However, the building costs have spiralled since Eskom started the procurement process and government had to sell a 13.91% stake in Vodacom to help stabilise Eskom's depleted balance sheet with a R23bn injection.

The delay was one of the main reasons South Africa endured load shedding in 2015, and energy analysts are concerned that the nuclear programme could face the same crisis.

However, Eskom CEO Brian Molefe has stabilised the power utility since moving ship from Transnet in 2015, ensuring the coal build programmes stick to new deadlines and ensuring load shedding does not occur.

He has also shown keen interest in nuclear energy, promoting it whenever he can. For this reason, it appears Eskom has been given a larger role in the nuclear programme.

It's return as a major nuclear player comes after it has criticised a previous process to procure nuclear in 2008.

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