Data provided by iNet BFA
Loading...
See More

Mega atomic deal

Mar 12 2012 07:17 Reuters

Related Articles

Peters: Too soon to price nuclear build

SA plans to up nuclear funding

SA's ties to Iran under scrutiny

Nuclear cost not yet clear

Economic wasteland

SA eyes R400bn nuclear build price tag

 

Johannesburg - South Africa will come to the rescue of a nuclear industry still struggling for customers a year after Japan's Fukushima disaster, with a tender for one of the world's biggest atomic power deals.

Firms from France, the United States, Japan, South Korea, China and Russia have been lining up for years for a chance to win the contract worth between R400bn and a trillion rand.

Chances to build reactors have grown fewer after the Fukushima accident, with many developed states trying to wean themselves off nuclear.

"It has become close to a buyer's market and not a seller's market, which it was before Fukushima," said H Holger Rogner, section head of the International Atomic Energy Agency's planning and economic studies section.

South African officials expect to open the bidding in the next few months for 9 600 megawatts of nuclear power - or about the normal output of six reactors. Africa's largest economy is operating on razor-thin electricity margins and needs the power to grow its energy-intensive mining sector and manufacturing.

Potential bidders are likely to include Areva, EDF, Toshiba's Westinghouse Electric Corp, China Guangdong Nuclear Power Group, South Korea's Korea Electric Power Corp and Russia's Rosatom.

In a budget proposal released last month, South Africa pencilled in R300bn for the nuclear build, but the figure was just the start, Energy Minister Dipuo Peters said.

"It's not a thumb suck and we don't actually say that is the end amount, but we believe that it is the beginning," she said.

Even though the amount is enormous for a country with an economy the size of South Africa's, analysts said financing should be readily available. The technology of the plants is established as well as the revenue they produce. South Africa, with a stable economy, is seen as a reliable borrower.

Factors that could increase cost competition include an export push by Japan's two major nuclear firms, Toshiba and Hitachi, which face a moratorium on new construction at home.

"(Fukushima) has made them more ambitious to go global. They have government support to go overseas. It is an export growth strategy for Japanese industry," said Will Pearson, energy analyst at the Eurasia Group political risk consultancy.

South Korea has also emerged as a nuclear export power. The United Arab Emirates has awarded a deal for $20bn, that could be worth up to $40bn over its lifetime, to a South Korean consortium to build and operate four nuclear reactors.

South Africa, with an unemployment rate of about 25%, wants to see nuclear as a generator of job growth as well as electricity. It is already home to the 1 800 MW Koeberg plant outside Cape Town, the continent's only nuclear station.

The government hopes to produce specialised products that could be sold to reactor makers elsewhere.

It also wants to find jobs for the hundreds of employees at its prototype, experimental reactor that was closed down in 2010 due to funding and technology problems.

The government aims to develop a plant for uranium enrichment for nuclear fuel. It voluntarily dismantled its nuclear weapons programme in the early 1990s.

Shadow of an arms deal

There are worries about how Pretoria will manage the bid, which will be its largest overseas purchase since an arms deal about a decade ago that led to several of its officials being convicted of receiving bribes.

President Jacob Zuma, then in a different government post, was also charged but not convicted.

"Given that the shadow of arms deal corruption continues to darken our democracy, government should be extra careful about the nuclear build programme," said Lance Greyling, a leading Democratic Alliance politician.

South Africa will be pushing to have the first megawatts come online by 2024. Unlike Japan, it has few earthquakes and its plants are likely to be built well inland, away from coasts and any tsunami threat.

It hopes to avoid a repeat of a power crisis that brought industry to its knees in early 2008 and shut mines.

"The marching orders that we have from the minister is that (it should be done) by the end of this year," Ditebogo Kgomo, the government's nuclear director, told Reuters.

The last attempt to build a new nuclear plant, led by state power utility Eskom, was scrapped in 2008 due to funding woes.

French utility EDF said in February it planned to bid in a possible partnership with Areva and China Guangdong Nuclear Power Corp. South Africa dismissed comments it told EDF to bid along with the Chinese.

 
eskom  |  nuclear energy
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

“Hippie sense makes business sense,” an entrepreneur said, adding that "purpose" was core to success.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...