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Eskom now officially in charge of nuclear deal

Dec 14 2016 15:18
Matthew le Cordeur

Cape Town – The Department of Energy (DoE) published a government gazette on Wednesday which officially moved the procurer of nuclear energy from the department to power utility Eskom.

The DoE’s lawyers surprised the Cape Town High Court with the unpublished gazette on Tuesday, using the determination to force the court to postpone the nuclear deal trial.

Judges Lee Bozalek and Elizabeth Baartman slammed Energy Minister Tina Joemat-Pettersson for not informing the court of the determination ahead of the trial and ordered her department to pay for the costs of the applicants' four advocates and legal teams.

“No explanation of why the fresh determination was issued at the last minute without prior indication was given,” Bozalek said on behalf of the judges. “They have not seen fit to furnish an affidavit explaining this step, despite having the time. 

READ: SA's nuclear plans: Fanning the flames of suspicion

“This has implications on members of the court, who had to read at length for this hearing,” he said.

“The determination was signed by the minister on 5 December and by Nersa on 8 December,” he said. “One would expect a determination would have been preceded by a consulting process.”

Advocate David Unterhalter, representing the environmentalists, said this was an example of the “gymnastics of government”.
“Government is using a variety of manoeuvring (tactics) to avoid judicial scrutiny and to proceed in haste with the issuing of RFPs without proper order of legality,” he said.

“Once the RFP is announced, the starting gun has gone off.”

READ: Eskom's nuclear RFP launch surprises markets

Earthlife's Dominique Doyle said “this was in fact, nothing short of an insidious delay and divide tactic on behalf of the Department of Energy, Eskom and Nersa".

"Instead of arguing the legalities and constitutionality of the determination made in 2013 and then kept secret for two years, the courts were forced to deal with this latest development," Doyle said. 

The publication of the gazette paves the way for Eskom to release the request for proposals for 9.6 GW of nuclear energy, which it is expected to do on Thursday.

Fin24 asked acting Eskom CEO Matshela Koko on the sidelines of the Western Cape High Court trial whether he would still release the RFPs this year, and his reply was clear: “We will release the RFPs this week.”

His answer, which Fin24 published during a court break, was printed out and used in court by the environmentalists' lawyers as a reason why the RFPs release should be frozen for three months, until their legal matter had been completed.

READ: Court bid to block Eskom on nuclear RFPs fails

The judges did not believe the release of the RFPs would have a detrimental impact on the court case and so did not agree to the request.

The determination replaces the 2013 determination, which the DoE only published in December 2015, as it moved to release the RFPs.

A major addition to the determination under section 34 of the Electricity Regulation Act is the role the private sector will play in the nuclear new build programme.

It says “electricity produced from the new generation capacity … shall be procured through tendering procedures which … provide for private sector participation”.

State-owned nuclear firm Necsa CEO Phumzile Tshelane said recently the programme will “contribute to the economy and to localisation in the nuclear new build programme, leading to employment opportunities and enhanced industrial skills”.

Necsa chairperson Kelvin Kemm said there is a “50% localisation target for the construction of the three nuclear power stations, so a huge amount of money will go around inside the local economy”.

Necsa’s role in the programme is also an important one, as it will form part of a joint procurement team with Eskom.

Eskom will be the owner operator and procurer for nuclear power plants, while Necsa will be owner operator and procurer for nuclear fuel cycle and multi-purpose reactors.

South Africa is embarking on a 9.6 GW nuclear new build procurement programme in line with a 2010 energy policy document that called for 9.6 GW of nuclear energy. However, new draft energy plan proposes nuclear only coming online by 2037 and critics have slammed Eskom’s rushed approach ahead of the policy finalisation in March 2017.

The determination presented to court on Tuesday:

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