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SA can’t afford nuclear build on top of Medupi - Outa

Jul 28 2016 18:32
Matthew le Cordeur

Cape Town – South Africa should only start the process of building several nuclear stations after it has fully completed its current coal power station project, civil action group Outa said on Thursday.

The Department of Energy could release its request for proposals for nuclear bids any day, having delayed this process from March 31. The main contenders to build the nuclear reactors include Russia, France, the US and China.

Outa spokesperson on nuclear Ted Blom told Fin24 on Thursday that CEO Brian Molefe told an investor session on July 5 that Eskom had been “nominated with the full nuclear programme”.

If that is the case, Blom said Eskom was not in a position to think about any more construction projects as its current new build project was so far behind schedule.

This comes after massive cost and time overruns at Eskom’s Medupi and Kusile power stations are expected to further strain Eskom’s financial resources, EE Publishers investigative editor Chris Yellend said on July 6.

The 4 764 MW Medupi coal-fired power station has been under construction since 2007, while the 4 800 MW Kusile coal-fired power station has been under construction since 2008.

However, Eskom spokesperson Khulu Phasiwe told Fin24 on Thursday that Blom was incorrect.

“The nuclear programme is essentially run by the Department of Energy and not Eskom,” he said. “Once they are done with process, the project will be owned and operated by Eskom. It is not running the project itself.”

“Everything will be handled by the Department of Energy,” he said. “The department will consult with us for input based on experience that we have accumulated over 30 years from running the Koeberg nuclear power station. It will be on making the recommendations.”

Kelvin Kemm, Necsa chairperson and a member of the ministerial advisory council on energy, told Fin24 on Thursday that Eskom has not been mandated to run the full programme.

“Undoubtedly at this stage, Eskom is earmarked to be the owner and operator, as it is a function of the state power utility to sell electricity at a profit so that it can expand the amount of energy it produces.

“Eskom has to double the electricity usage of the nation to produce electricity and to provide it extremely well,” he said. “It should not be aiming to get into construction.”

Kemm indicated who he believes will run the nuclear build programme.

“It’s my position that we bring as much private enterprise together in a collective to optimise skills in the country,” he said. “The nature of the new build will be multi-subcontractor projects through one centralised command centre.

“It won’t be one organisation that does the construction,” he said, adding that 50% of the project will be sourced from local South African companies.

“The decision about who exactly will build the new nuclear has not been decided."

He believes a private company should be contracted to oversee the centralised command office and report directly to the Department of Energy.

Blom disagreed with Kemm’s assessment that South Africa needed to double its energy usage.

“I am quite in awe of nuclear and I was once authorised to work in nuclear,” he told Fin24. “The fact of the matter, however, is that it will take too long to build the power stations.

“It will take at least 15 years and during that time the technology will change,” he said. “Currently, we have 42 GW with another 9 GW coming online with Medupi and Kusile.

“The mining industry is closing down,” he said. “Mines and smelters use between 60% and 70% of Eskom’s electricity. In five years’ time, we won’t have any more mines, which means we don’t require as many power stations.”

Further, he said renewable energy and energy-efficient power systems will further decrease the level of power needed.

Focusing on Eskom’s poor track record at Medupi, Kusile and Ingula, Blom said Eskom could not get involved in any more projects.

“We remain unconvinced about the estimated R1trn nuclear energy plan, which will devastate the shrinking of the South African economy, while this state-owned entity continues to drown the nation with increasing energy costs along with incomplete and grossly over-run energy projects,” Blom said in a statement on Thursday.

Outa claims that Eskom is withholding crucial facts that will reveal why it cannot be entrusted with the nuclear programme.

According to Outa, these include "the gross over expenditure and delays at Medupi, which now has an expected cost by completion in excess of R200bn. Given that an ‘off the shelf’ solution could have been acquired by Eskom for under R35bn and the entire plant built within 48 months - as was accomplished by Tata Energy at Mundra Power station at the same time at Eskom’s new power projects got under way, the public have every right to be extremely angry with Eskom at how this debacle has played out over the past four years".

  • Outa claims it also includes "oversight of the critical shortage of water for the Medupi plant, which has resulted in a need to commission a water pumping and storage facility that will probably not be available until 2024. Without the additional water, which will have to come from Lesotho, the Medupi power plant cannot operate as intended and designed, no matter what spin Eskom proffers".
  • “Gross over expenditure, delays and irresponsible contracting at Kusile, where the coal supply agreements have yet to be signed, despite several years of negotiation", is another crucial fact. "In addition, construction has been slowed down to snail’s pace as Eskom failed to budget and raise capital in accordance with acceptable worldwide practice for this project," says Outa.
  • “Additional to the gross over expenditure, delays and incompetent commissioning of Unit 3 at Ingula Power station, this unit suffered a severe malfunction on its first day of operation and some two months thereafter, Eskom has yet to inform the public of this disaster, following incorrect procedures being followed at Unit 3 at Ingula. Such basic incompetence is extremely costy to society and an embarrassment to the world."
  • Outa also questions why Eskom directors have recently "only paid themselves an R18m bonus – when the performance pact between Eskom and its shareholder clearly stated that if there were transgressions bigger than R10m in any financial year, bonuses would be forfeited".
  • outa  |  eskom  |  sa ecnomy  |  energy  |  nuclear
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