Cabinet Set On Nuclear Plan

Cabinet set on nuclear plan, with Eskom at the helm

09 May 2013 | Linda Ensor

Gigaba’s unequivocal statement may help clear up confusion over government’s intentions on nuclear energy, but Eskom’s role will raise yet more questions

THE Cabinet remained "resolute" about developing South Africa’s nuclear energy capacity, Public Enterprises Minister Malusi Gigaba said on Wednesday, and Eskom would be the operator of the government’s nuclear programme.

The minister’s unequivocal statement may help clear up confusion over the government’s intentions on nuclear energy, confusion that stemmed from conflicting signals given in recent times by various political leaders, officials and energy experts.

However, Mr Gigaba’s insistence that Eskom would be the operator of the programme will raise yet more questions.

Energy analyst Chris Yelland said the scale and complexity of the planned power stations required Eskom to have technology, financial and operating partners.

Mr Yelland noted that the Cabinet’s position in the past was that the utility would "build, own and operate" the nuclear fleet, as had been the case with Koeberg and the new Medupi and Kusile coal-fired power stations.

Department of Energy director-general Nelisiwe Magubane moved to dismiss fears that the government’s insistence on Eskom operating the planned nuclear plants would put off potential partners. She said vendors of nuclear technology such as Westinghouse and Areva were rarely interested in operating power stations, although there were companies in South Korea and China that did both.

"All investors without fail want a public entity which has government backing, otherwise they cannot do it on their own. For them it is always attractive to have a public entity being part of the project.

"We are exploring a number of permutations of Eskom being an operator. For example, it could tie up with a strategic partner and then jointly seek a vendor of technology. Or, Eskom as the operator could team up with a supplier of nuclear technology."

Ms Magubane said the government would have to decide on the kind of partnership Eskom would enter into and consider the permutations of its relationship with its future nuclear partners. This would clarify what was meant by Eskom being the "operator" of the nuclear programme.

Whatever the permutation chosen, it would have Eskom as the anchor for the programme because nuclear power liability would always reside with the state, with Eskom as its custodian. "We are not going to have a situation in the country where a foreign operator runs the nuclear programme," she emphasised.

Mr Gigaba stressed in an address to the Cape Town Press Club on Wednesday that a decision would have to be made by the Cabinet this year on the nuclear build programme.
The National Nuclear Energy Executive Co-ordinating Commission is expected to present its view on the options for nuclear power to the Cabinet in the near future.

He believed the nuclear build programme could be a critical driver for South Africa’s industrialisation and the localisation activity if the foreign original equipment manufacturers were forced to invest in the local economy.

Discussions were under way with the Department of Energy on the need to bring the construction of a third new coal-fired power station forward as it would take time to raise funds and build the nuclear power stations.

Construction of the nuclear power stations would be staggered into three phases of 3,200MW each and would have to take account of safety and technology issues.
Critics have argued against a new nuclear build programme on the grounds of its exorbitant cost, suggesting there are less expensive alternatives. Recent modelling on nuclear power commissioned by the National Planning Commission found more nuclear capacity for South Africa was "not urgent".

But Mr Gigaba said the cost of the build had to be weighed against gains made in reducing carbon emissions and long-term stability of supply.

"Which costs are we willing to bear? That is the decision we have to take," he said

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