Government says it supports Eskom's decision to scrap plans for what would have been the country's second pressurised water reactor nuclear power plant.

"We are comfortable that this decision will not undermine the national security of supply situation," public enterprises director general Portia Molefe said on Friday.

Eskom announced earlier in the day that it had terminated the process of selecting a preferred bidder for the construction of the Nuclear-1 project because of the project's cost.

It was estimated that the plant would cost more than R100 billion, which would have been the largest single investment in the parastatal's history.

Molefe told a media briefing at the Union Buildings that national electricity supply would be assured by new generation and rehabilitation projects in progress, and the projected slow-down in electricity demand associated with the global down-turn.

She said care had to be taken that Eskom did not over-extend its balance sheet, and that the country's ability to provide the economy with competitively priced energy was not jeopardised.

Government was committed to exploring nuclear energy as a means of diversifying the country's energy base-load from an overwhelming reliance on coal, to stabilise the grid and to reduce its carbon footprint.

It would set up a task team, led by the department of minerals and energy, to work with Eskom on procuring a nuclear technology partner to continue the introduction of nuclear generating capacity.

Eskom said earlier on Friday that the two bidders, the EPR consortium led by state-controlled Areva of France and the N-Powerment consortium led by Westinghouse of the USA, had been informed of the decision.

"The board has expressed its appreciation to the two bidders for their interest in the Eskom build programme, and in particular their desire to participate in the nuclear industry in South Africa," said Eskom chief executive Jacob Maroga in a statement.

The end of 2010 was pencilled in on the calendar for the start of construction on the plant, which would have had a capacity of between 3200 and 3300 MW.

Areva built South Africa's only existing nuclear power plant at Koeberg in 1984, while Westinghouse was involved in the Pebble Bed Modular Reactor project.

Eskom currently depends on coal for over 80 percent of its power generation capacity.

South Africa experienced widespread power cuts earlier this year and Eskom, which generates 95 percent of the electricity used in the country, says it expects supply shortages until 2013.