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Ratings agencies won't look kindly upon nuclear plans – economist

Sep 08 2016 13:58
Liesl Peyper

Cape Town - The National Treasury will have little choice but to start making arrangements for funding South Africa’s intended nuclear procurement programme, KPMG economist Christie Viljoen told Fin24 by phone. 

South Africans could expect an announcement to this effect in Finance Minister Pravin Gordhan’s mini-budget and more detailed information in February’s budget for 2017/18. 

“Look, it’s obvious that our government wants to go the nuclear route. It can’t be stopped any more. It’s now just a matter of finding the money,” Viljoen said. 

On Wednesday, Energy Minister Tina Joemat-Pettersson announced that South Africa’s nuclear procurement programme would officially kick off on 30 September, which will pave the way for interested parties to submit their tender documents. 

According to Gordon Mackay, the DA’s deputy shadow minister of energy, Joemat-Pettersson’s announcement is “ill-timed and ill-advised”, because her department is still facing court action from Earthlife SA and the Southern African Faith Communities' Environment Institute (Safcei).

The two organisations claim Joemat-Pettersson acted unconstitutionally because she hadn’t submitted the records of decision that had been reached with supplying countries to parliament first. 

READ: Safcei prepared to go to ConCourt over ‘secret’ nuclear deal

“We need to constantly highlight that the process the minister followed was irregular,” said Mackay. Joemat-Pettersson had already allowed a vendor parade in which a number of countries had participated that resulted in an inter-governmental framework agreement. The agreement was only supposed to be signed after the request for proposal that is taking place on 30 September. 

Both KPMG’s Viljoen and the DA’s Mackay are of the view that ratings agencies won’t look kindly upon South Africa’s nuclear plans. “It’s going to put additional pressure on an already tight fiscal framework and on the current account,” Viljoen said. 

Ratings agencies would want to see government taking steps to improve economic growth and contain expenditure,” Mackay said, “but now we’re going forward with a R1trillion expenditure.” 

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