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SA postpones nuclear deal as court case looms

Apr 06 2016 15:19
Matthew le Cordeur

Cape Town – A court case questioning the legality of the Department of Energy’s (DoE) 9.6GW nuclear procurement programme has caused the department to delay gazetting the request for proposals (RFPs), the Democratic Alliance (DA) said.

The DoE said it plans to gazette the RFPs “early in this financial year”, after missing a deadline it set to finalise the process by 31 March.

“There is a consultation process with key stakeholders (Treasury and the IPP Office) that the DoE has undertaken before issuing the RFPs,” the DoE told Fin24 in a statement on Tuesday.

“This consultation process has not yet been concluded and the DoE will issue the RFP as soon as the process is concluded early in this financial year.”

READ: SA did sign nuclear deal with Russia - environmentalists

However, no new deadline had been set on when the RFPs would be gazetted, Energy Minister Tina Joemat-Pettersson told Parliament on Wednesday, according to DA MP Gordon Mackay.

Mackay said it appeared Joemat-Pettersson is now taking a cautious approach on the nuclear procurement programme, following court action by two environmental organisations questioning the legality of the process.

In response, Joemat-Pettersson insisted that the court action will not delay the programme.

"We are working with the independent power producers’ (IPP) office, and I have said it before, they are interrogating the request for proposals and this doesn’t mean that it is stalled - it may be delayed,” Joemat-Pettersson told Bloomberg.

“I want a thorough and transparent procurement process subjected to proper scrutiny. The process must not be stalled due to legal process or challenges. As soon as the IPP Office and the National Treasury are satisfied, then the RFP will be issued.”

In its legal proceedings against the DoE, Earthlife Africa (ELA) and the Southern African Faith Communities’ Environment Institute (Safcei) said on March 31 that they received documentation indicating that a binding deal had been signed between South Africa and Russia’s nuclear company Rosatom.

They said “the Russian agreement was entered into unlawfully, but makes (an) internationally binding commitment to buy a fleet of nuclear reactors from Russia”.

From the state law adviser’s explanatory memorandum that was prepared in November 2013 but only revealed recently to Safcei/ELA, “it is evident that the Russian agreement is to build reactors and an enrichment plant", the group said.

They said other subsequent agreements would “cover the details of how it is to be financed, not if it would go ahead”.

Minister demonstrating caution - DA

Mackay said Joemat-Pettersson told the Portfolio Committee on Energy that she “was waiting for advice from the IPP Office” before proceeding with the release of the RFPs.

“The minister is demonstrating caution, which should be welcomed,” he told Fin24. “She should not proceed until the court case is clear.”

“If they release the RFPs, it will impact on work of the Portfolio Committee on Energy and Parliament’s oversight role and it will impact on the legality of the procurement programme, leaving the DoE and her (the minister) open to legal challenge.”

Gordon, who heads up the DA's energy portfolio, said it was a victory for the opposition party and civil society, who he said caused the minister to be cautious.

RFPs will be gazetted soon - nuclear industry

However, a senior member of the nuclear industry, who wished to remain anonymous, told Fin24 on Wednesday that there should be no major delays gazetting the RFPs and said the process should be concluded within four weeks.

Additionally, Dr Kelvin Kemm, chairperson of the National Energy Corporation, told Fin24 on Wednesday that while the intention was to get the RFPs done by the end of March, some internal deadlines had been missed.

“I am still optimistic that it will be imminent,” he said. “There is no reason for it to be delayed.”  

The RFP gazette will take the nuclear programme one step closer to reaching fruition. Economists and rating agencies have warned that the programme’s high up-front costs and liabilities will have a detrimental impact on the economic stability of the country.

President Jacob Zuma and Finance Minister Pravin Gordhan made it clear this year that the programme will only progress at a scale and pace the country can afford.

READ: Nuclear will plunge SA into ‘junk status’ - economist

In a statement on Wednesday, Gordon said the DA "has staunchly opposed the nuke deal since it was first revealed that the South African government, under the direct leadership of President Zuma, had signed an agreement with the Russian state-owned nuclear corporation, Rosatom.

"This agreement was entered into without the correct process being followed and raised serious questions relating to potential corruption given the personal involvement of the president.

"Further questions were raised after the purchase of Shiva Uranium by the Guptas, suggesting that the nuclear deal is a project of state capture for the personal benefit of a connected few and opens the door for corruption of the highest order.

"The procurement process is now in limbo," he said.

Safcei spokesperson Liz McDaid said on Wednesday that "due to missing a technical deadline for issuing a request for proposals to build the nuclear power generators, the procurement is now on hold".

“Either the department has once again bungled in some technical way and failed to meet its own deadline, or someone somewhere has called a halt to this insanity” said McDaid. “Either way, it is a small victory”.

Rosatom told Fin24 that it understands "the complexity that comes with preparing for a project of this magnitude".

"As Rosatom, we remain committed and ready to participate in South Africa’s nuclear build procurement process," it said on Wednesday.


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