Mega atomic deal
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
"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
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
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
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
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.