Eskom hits first hurdle as nuclear procurer

Dec 15 2016 17:08
Matthew Le Cordeur

Cape Town – Eskom’s bid to kick start the nuclear procurement programme hit a speed bump on Thursday when it postponed issuing the request for information (RFI).

Acting Eskom CEO Matshela Koko told Fin24 earlier this week that the RFI, which forms the non-financial part of the overall request for proposals (RFP), would be started this week.

READ: Eskom to release nuclear RFP this week - Koko

Eskom spokesperson Khulu Phasiwe confirmed that the RFI would be released on Thursday, but then alerted Fin24 to a delay caused by a board decision for a sub-committee to have one final review of the RFI.

“This determination from government was done yesterday,” he said, referring to the gazette that moved the procuring agent of nuclear from the Department of Energy to Eskom. “After that determination, Eskom needed to follow certain processes at a board level. That is why they have delayed the issuing of the RFI.”

He said Eskom now expects to issue the RFI on Monday or Tuesday.

That will then be the day that Eskom and Necsa’s collaborative team officially starts the process to procure a fleet of nuclear power stations to add 9.6 GW to the grid.
Dr Kelvin Kemm, chairperson of state-owned nuclear firm Necsa, told Fin24 on Thursday that the RFI will seek countries and their companies (like Russia and Rosatom, China and SNPTC, France and EDF) to agree to work with South Africa in mutual collaboration.

“Everything is unfolding according to plan,” he said. “Treasury still has to approve various factors related to the financial aspects before two RFP’s are released related to financial matters.”

“However, this RFI is the initiator of the RFP process, as it sets out terms by which South Africa and foreign companies will work with each other.  The RFI requests agreement on very important issues such as the nuclear quality standards and fabrication processes which will be used, which in turn link to agreements which we have with the IAEA (International Atomic Energy Agency). It must also be clearly pointed out that the South African National Nuclear Regulator as an independent body has legal jurisdiction over certain aspects”.

READ: Nuclear procurement: No deal signed - DoE

“It also requires the nuclear bidders to agree to various conditions, which includes localisation factors leading to the target of 50%.  Also included are factors related to IP [Intellectual property], and accessibility such that local technical experts can gain access to any devices,” he said.

“The RFI and RFP process is the pathway towards the final procurement process,” he said. “The RFI clarifies the interactive process for the nature of the eventual agreement.”

Phasiwe told Fin24 on Thursday that once Treasury and the Department of Energy are satisfied with the RFP, then Eskom will release it. He believes that will occur in the first half of next year.

It was announced recently that Eskom will be the owner, operator and procurer for the nuclear power plant construction, while Necsa will be owner operator and procurer for the entire nuclear fuel cycle system and multi-purpose reactor which Necsa has labelled the CPR for Commercial Production Reactor, since it will be aimed at the production of consumer products such as nuclear medicine.

READ: Eskom now officially in charge of nuclear deal

Energy Minister Tina Joemat-Pettersson published a gazette on Wednesday, which officially handed over the role of nuclear procurer from the Department of Energy to Eskom.

Joemat-Pettersson told Parliament in September that “nuclear energy can only be procured with legal prescripts of the country and only after a thorough assessment”.

"We are committed to a thorough cost-benefit analysis and the cost-benefit analysis is part of the procurement process,” she said.

That process will form part of the RFP, which the Eskom/Necsa team hopes to release in February. However, this requires Treasury sign off, due to the financial nature of the request.

Treasury says the nuclear procurement programme will need to follow a fair, equitable, transparent, competitive and cost-effective process in compliance with the Constitution and the prescripts of the Public Finance Management Act.

Phasiwe told Business Report on Wednesday that the RFP “is not entirely up to Eskom”.
“National Treasury must also satisfy itself about the process,” he said. “The request for information does not need the approval of the Treasury. The most important thing at the moment is to ascertain if there is appetite in the market.”

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