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Going fission?

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Going fission?

27th October 2017

By: Terence Creamer
Creamer Media Editor

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We know for certain what President Jacob Zuma’s latest Cabinet reshuffle was not. It was not about South Africa, or about good governance. It was not about doing what is necessary to place the economy back on a growth trajectory. It was not about dealing with the triple scourge of poverty, inequality and unemployment.

So, what is it about? It’s about the increasingly destructive fight for control of the African National Congress and cultivating a patronage network around what’s left of State resources. The removal of Blade Nzimande is the clearest signal of the former, while the appointment of David Mahlobo as the country’s third Energy Minister since the beginning of 2017 is the surest sign of the latter.

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For reasons that are not fully transparent, Zuma wants the nuclear build programme accelerated – this, despite the absence of a credible electricity generation road map that takes account of the incredible fall-off in domestic demand for electricity, as well as developments in the cost of the various generation technologies available to South Africa.

It also ignores the constitutional, regulatory and international constraints to pulling the trigger on a nuclear procurement programme.

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For one, South Africa will have to renegotiate and ratify several new intergovernmental agreements (IGAs). To pass muster, these agreements must go before Parliament for approval. It will also not be viable for Mahlobo to simply conclude a single IGA with a preferred nuclear vendor country, as this will, no doubt, be contested in the courts. In other words, just this little step in the process is going to take time.

Likewise, to secure the National Energy Regulator of South Africa’s concurrence on a nuclear procurement determination is going to take time. Surely, the regulator is not going to allow itself, once again, to be strong-armed into signing off on such a document without some form of public participation. Surely!

Most importantly, though, is the fact that Eskom, which is still the designated procurer, owner and operator of any new nuclear plant, is simply not in any financial state to credibly take on another megaproject.

The State-owned utility’s high level of indebtedness, its junk status and its poor financial prognosis will make it close to impossible to come up with a funding plan that makes sense for Eskom, government, the taxpayer and the electricity consumer. Never mind the growing anger over corruption at the organisation and the fact that all trust in Eskom to manage a large-scale project clearly has entirely evaporated into a cloud called ‘State capture’.

What’s more is that there is simply no more fiscal space for the National Treasury to act as the backstop for Eskom’s nuclear ambitions.

In other words, try as Mahlobo might to accelerate the nuclear plan, the likelihood of success is, thankfully, far from guaranteed.

Sadly, though, this ‘fission expedition’ will once again distract the Department of Energy from what should be its priority: finalising a credible plan for ensuring the cheapest and most sustainable electricity mix possible. All things being equal, it is highly debatable whether nuclear would feature in such a plan at all, given what is happening to technology costs.

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