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ANALYSIS: Nuclear faces bumpy road as Koko dreams of 2025

Dec 21 2016 09:00
Matthew le Cordeur

Cape Town – As the nuclear industry celebrates its diluted launch of the process to procure 9.6 GW of nuclear energy, acting Eskom CEO Matshela Koko has revealed how his nuclear dream will become a reality.

This follows the issuing of the request for information on Tuesday, which forms the non-financial part of the overall request for proposals (RFP), which requires Treasury’s sign off before it can be published. That is due to be released in the first half of 2017.

READ: Eskom fires starting gun on nuclear plan

While Eskom nuclear chief Dave Nicholls says in the RFI that it is a “stand-alone, information-gathering and market-testing exercise only, and NOT a competitive tender”, it is clear Eskom and Necsa see the RFI as the start of their dream to build a fleet of nuclear power stations.

And while the dream may have started a little less dramatically as hoped for people like Koko, the race has indeed begun.

The deadline for countries like Russia, France, South Korea, China and the US to respond to the RFI is 28 April 2017, by which stage Eskom hopes the issuing of the full RFP would have been made.

READ: Russia and France welcome Eskom’s nuclear request

Koko is a strong advocate of building new nuclear power stations and has been jumping - and  tweeting - with joy since the release of the RFI on Tuesday.

In one tweet, he gave a sneak peek into his vision. He said that following the RFI, Eskom will follow up with the RFP, complete the funding plan and the business case. “Then GO (2025)”, he tweeted, referring to when he hopes the power stations would have been built.

For the amount of nuclear power stations Eskom requires by 2025, the tender will need to be signed earlier rather than later in 2017, something Koko will push for.

Some energy experts questioned the purpose of the release of the RFI, as it is merely 16 pages of the overall 1000-page RFP document and seeks information Eskom already has.

The reason for its release could be because Eskom has been adamant that it would release the RFP in 2016, but has been unable to do so as Treasury has not signed off on the financial aspects.

Necsa chairperson Kelvin Kemm told Fin24 this week that the RFI is part of the RFP, as it lays down the procedural and technical ground work and rules before the countries submit their funding and pricing models. In other words, had Treasury signed off on the RFP, it would have simply formed a part of it.

Treasury could be delaying this until after the Department of Energy’s new draft energy plan has been finalised and approved by Cabinet, a process that is expected to be completed by March or April 2017.

What could be a problem for Eskom is if the new energy plan, termed the Integrated Resource Plan, sticks to its current base case. This sees the need for new nuclear power stations slowly going live between 2037 and 2050.

READ: Countdown as Eskom to kickstart nuclear process

Additionally, Treasury has said that it won’t extend Eskom’s current R350bn guarantee facility. "If Eskom were to want to use the guarantee for anything other than what was in the build programme they would have to come and negotiate with us,” Business Day quoted Treasury director-general Lungisa Fuzile as saying in December.

That will make the funding purpose tricky for Eskom and might lead to another Nenegate, as Finance Minister Pravin Gordhan works to reform state-owned entities to not rely on Treasury handouts.

Many believe former finance minister Nhlanhla Nene was fired from his post this time last year as a result of a similar stance against providing the country with the financial sign-off to invest in nuclear.

Court cases loom

There is also the Western Cape High Court trial in which environmentalist groups Safcei and Earthlife SA are challenging the government over the legalities of the nuclear process. The case, which may draw in Eskom, has been postponed to February.

If the judges – who want to speed up the trial – rule in favour of the groups, then the whole nuclear process could be in jeopardy.

The Democratic Alliance and Outa have also indicated that they are looking at legal options relating to the nuclear procurement process.

“The DA will continue to explore all legal avenues available to it in order to ensure this increasingly illegal act of state is blocked,” DA MP Gordon Mackay said last week.

Outa chairperson Wayne Duvenage said last week that “government are simply manipulating the legal process to ensure they can commence their nuclear energy procurement process before the High Court has an opportunity to scrutinise their shady dealings”.

READ: Department of Energy not credible – Outa

“Outa is currently assessing its legal options and other avenues on this matter.”

The fear of going big on nuclear seems to focus on one major concern: Allegations and rumours that President Jacob Zuma and the Gupta family are at the centre of the push for nuclear in order to build a business empire focused on the billion-rand industry that will have a sustainable future for over 100 years.

As Zuma faces a major revolt in his own party and within the country ahead of the ANC elective conference, many political analysts expect 2017 to be a rocky year.

And the nuclear dream might share that bumpy ride.

* Matthew le Cordeur is a senior content producer at Fin24 and focuses on the energy and nuclear sector in South Africa.

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Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

necsa  |  eskom  |  matshela koko  |  nuclear deal  |  nuclear energy

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