South Africa allocates funds for nuclear

24 October 2015

South Africa says it has put aside ZAR200m ($14.7m) in preparation for its nuclear energy programme to ease pressure on growth caused by ongoing electricity shortages. "National Treasury is working with the Department of Energy to consider the costs, benefits and risks of building additional nuclear power stations," the treasury said in its medium term budget policy statement. South African Finance Minister Nhlanhla Nene has previously pledged that the nuclear programme will be transparent, answering concerns among opposition parties that the government is moving ahead without proper disclosure. South Africa has signed agreements with several countries as it starts its nuclear build programme to develop 9,600MWe of nuclear energy by 2030.

While the Department of Energy has dismissed cost estimates of about ZAR1,300bn to build the NPPs, neither the department nor the Treasury has given an indication of the programme's overall cost. This is the first cost allocation given to this project as South Africa plans to finalise its vendors for the programme by the end of the financial year on 31 March 2016. "Over the medium term, ZAR200m will be allocated (ZAR100m in 2016/17 and ZAR100m in 2017/18) and to support preparatory work for nuclear procurement," said the Treasury. The government is revising its integrated resource plan which maps out the future energy mix and includes options for renewables, coal, gas and nuclear power.

Earlier in October, Canadian company SNC-Lavalin opted out of the bidding process for South African nuclear contracts. While nearly a dozen Canadian companies are seeking to take part in the South African project, Canada's main nuclear exporter pulled out despite invitations from the South African government. Canada is listed as one of seven countries preparing bids for the main part of the nuclear-reactor project. However SNC-Lavalin, which created Candu Energy in 2011 with the purchase of the reactor division of Atomic Energy of Canada Ltd from the Canadian government for $15m, says it will not bid because its "chances of success" would be better elsewhere.

Canada's Foreign Affairs department confirmed that Canada is negotiating a nuclear co-operation agreement with South Africa. The agreement under negotiation could be "beneficial" to Canada's nuclear industry, department spokesperson Amy Mills said in an e-mailed response to Canada's Globe and Mail. The co-operation agreement could be signed by the end of this year, according to Ron Oberth, president and CEO of the Organization of Canadian Nuclear Industries.

However, SNC-Lavalin said it "is pursuing new-build contracts in several promising markets. As a commercial business, we assess the markets and allocate our resources to those markets where we have better chances of success". Currently the focus is on Argentina, China, Poland, Romania and the UK. The company's disinterest in South Africa will feed speculation that South Africa has already decided to buy its nuclear reactors from Russia, the Globe and Mail said. South African media have repeatedly reported that Russia is likely to get the contract despite government denials. Other bidders for the South African deal are believed to include China, France, Japan, the US and South Korea.

Meanwhile, two African environmental organizations, Earthlife Africa and the Southern African Faith Communities Environment Institution, have initiated a legal challenge to the South African government's nuclear new-build plans. They have applied to the Cape Town High Court challenging various aspects of the nuclear procurement process including the legality and constitutionality of framework agreements between South Africa and various other countries.



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