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South Africa Ignores Advisers Over $85 Billion Nuclear Plan

South Africa Ignores Advisers Over $85 Billion Nuclear Plan

Paul Burkhardt, Mike Cohen and Franz Wild | From Bloomberg

South Africa’s government is forging ahead with plans to spend as much as 1 trillion rand ($85 billion) on new nuclear plants, ignoring objections from environmental activists, opposition parties, unions and even its own advisers.

Bids will be sought from the U.S., China, France, Russia and South Korea to add 9,600 megawatts of atomic power to the national grid to address energy shortages in Africa’s second- largest economy, President Jacob Zuma said in his annual state- of-the-nation address Thursday. The first output is targeted for 2023, he said.

“We know exactly what we need,” Zuma said in response to questions after a speech in Cape Town Friday. “We are now well informed. We are moving ahead.”

South Africa is turning to nuclear energy as an ageing fleet of coal-fired plants operated by state utility Eskom Holdings SOC Ltd., the supplier of 95 percent of South Africa’s electricity, are unable to keep pace with power demand. Rolling blackouts this month have curbed output at mines and factories and prompted a selloff of the nation’s currency and bonds.

The rand reached a 13-year low against the dollar on Wednesday and foreigners dumped 6.9 billion rand of South Africa’s debt since Feb. 3, when the outages began.

Detractors of the nuclear plan argue that the plants will be too costly, take too long to build and the bidding process will be vulnerable to corruption. The National Development Plan, the government’s blueprint for growing the economy, recommended that alternatives be investigated, including the use of gas plants, which would be easier to finance and build.


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‘More Expensive’

“Nuclear is not a wise choice for South Africa,” Anton Eberhard, a member of National Planning Commission that advises on implementing the development plan and professor at the University of Cape Town’s Graduate School of Business, said by e-mail on Feb. 11. “Nuclear energy will not enable us to resolve our immediate power crisis. It is more expensive than other energy options and international experience shows us that nuclear projects are prone to cost and time overruns.”

A 20-year plan published by the energy minister in December 2013 said the decision on whether to build new nuclear plants could be delayed until at least 2025 to allow for a proper assessment of alternatives and likely power demand. It warned of uncertainty over the cost of nuclear energy, with some studies showing a range of $3,800 to $7,000 per kilowatt hour.

Areva SA, EDF SA, Toshiba Corp.’s Westinghouse Electric Corp., China Guangdong Nuclear Power Holding Corp., Rosatom Corp. and Korea Electric Power Corp. have expressed interest in building new plants in South Africa. Eskom currently runs Africa’s only nuclear plant at Koeberg, near Cape Town. The 1,800-megawatt plant began operating in 1984.

Renewable Energy

The Democratic Alliance, South Africa’s main opposition party, said the nuclear bidding process had been clouded by secrecy and had potential for corruption. The party called on Zuma to abandon it.

“Future generations of South Africans will pay for this deal in electricity-price hikes if it is not stopped now,” Mmusi Maimane, the DA’s parliamentary leader, said at a rally in Cape Town on Feb. 11. “We must allow independent power producers to supply electricity to the grid in significant numbers and massively expand our renewable-energy program.”

The National Union of Mineworkers, an ally of the ruling African National Congress, said nuclear power wasn’t a priority and more focus should be placed on completing two new coal-fired power stations that are running behind schedule.

Greenpeace, an environmental activist group, staged a protest against nuclear energy at an industry meeting in Cape Town on Thursday.

‘Big Business’

“The fact that this country is underinvesting in renewable energy is a real tragedy,” Melita Steele, Greenpeace’s senior South Africa climate and energy campaign manager, said in an interview on the group’s Rainbow Warrior sailing boat in the Cape Town harbor on Feb. 10. “It really comes down to vested interests. There’s big business behind coal, there’s a lot of money behind nuclear.”

Zuma said addressing the energy crisis is his administration’s top priority. More hydropower and gas-generated electricity will be secured alongside nuclear, he said.

There will be “a fair, transparent, and competitive procurement process to select a strategic partner or partners to undertake the nuclear-build program,” he said.