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Energy Minister says Eskom to fund nuclear as new procurement framework is unveiled

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Energy Minister says Eskom to fund nuclear as new procurement framework is unveiled

Photo by Duane Daws
Eskom group executive for generation Matshela Koko

11th October 2016

By: Kim Cloete
Creamer Media Correspondent

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Eskom’s balance sheet will be used to leverage funding for government’s anticipated multibillion-rand nuclear build programme, Energy Minister Tina Joemat-Pettersson announced on Tuesday.

She told Parliament’s Portfolio Committee on Energy that the National Treasury would not be funding the programme, but that Eskom would raise the money in the international markets and would be the owner-operator of the nuclear build programme.

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“I want to categorically state that there is no basket of money in Treasury that will be used for this programme, just as there was no basket to build Medupi, Kusile and other huge power plants.

“The money will be found off the global markets. Eskom will deliberate and give us a better idea on how they fund projects,” the Minister said. 

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Joemat-Pettersson also told the committee that, following the Eskom board’s September 2015 decision that the utility resume its role as majority owner-operator for nuclear power plants, the Department of Energy (DoE) would recommend to Cabinet that Eskom be designated as the procurer of the nuclear new build programme power plants. Hitherto, that role had been assigned to the DoE.

In addition, the South African Nuclear Energy Corporation, or Necsa, should be designated as the procurer for the fuel-cycle and multi-purpose reactor components of the programme.

The department, meanwhile, would act as the “programme coordinator”.

A request for proposals for the controversial nuclear build programme was meant to be issued on September 30, but was put on hold to give Cabinet time to approve the updated Integrated Resources Plan (IRP). 

Joemat-Pettersson said the IRP had to be approved by Cabinet before being published for broader consultation. The plan had been due to go to Cabinet this week, but was postponed.

“We want a full composition of the Cabinet committee to be present when we discuss it,” she said.

Faced with financial troubles and load-shedding in 2014, Eskom said it would not be prudent to provide further funding to other programmes, as it needed to focus on its mega-programme for Medupi, Kusile and other major build projects.

However, Eskom and DoE officials told the committee that Eskom’s position had changed alleging that its financial position had been turned around and that it was far more efficient.

“We have turned the corner. Eskom is ready to execute the nuclear build programme,” Eskom group executive for generation Matshela Koko told MPs. 

“Eskom has the experience and has operated Koeberg, a world-class nuclear power plant in Africa. South Africa should not ignore the skills, capabilities and expertise that exists in the country,” Joemat-Pettersson said.  

“We are committed to a clean energy mix which reduces our reliance on coal, but we do need baseload energy. We cannot hand over a future which doesn’t have a good and clear carbon footprint that protects our environment for the next 100 years.” 

The Minister said the DoE was a policy-making department and was not involved in signing any deals.

“This procurement method announced today should demystify the myth that we signed some deal. I have not signed any nuclear deal. The reality is that Eskom is the owner-operator of nuclear. All our policies and laws designate Eskom as the owner and operator of the nuclear power plants.”

Joemat-Pettersson said her next immediate “ambition” was to help improve the working relationship between Eskom and the National Energy Regulator of South Africa. She said the procurement process would be above board.

“I will ensure that the process is above board; that the pace, scale and price of the programme is within the accessible range of our country. We will ensure that the process is not only transparent and above board, but is free from corruption, that it has the necessary security clearance and that we protect the integrity of the programme against any inadvertent risks.”

But opposition political parties were sceptical.

Democratic Alliance spokesperson on energy Gordon Mackay said the announcement about Eskom was “nothing short of an elaborate sleight of hand aimed at muddying the waters and subverting effective Parliamentary oversight over the . . . nuclear deal.”

“With Eskom becoming the procuring agent, that removes oversight of Parliament from the nuclear deal.

Economic Freedom Fighters MP Marshall Dlamini said money for the proposed nuclear deal should rather be allocated to higher education and funding for universities, which he said was far more urgent and important.

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