Fiscal vulnerability strengthens the need for caution on nuclear project

2017-03-01 10:03

Everyone’s ears were pricked for the words “nuclear power” during Finance Minister Pravin Gordhan’s budget speech on Wednesday, but he avoided the words like the plague.

Nor has any money been budgeted for the planned nuclear power project that President Jacob Zuma is doing his best to push through and, it is speculated, is the main reason Gordhan is under siege.

Professor Raymond Parsons of North West University’s business school said Gordhan’s silence about the issue did not mean that a robust debate about the affordability of nuclear power should not go ahead.

“Although Eskom last year indicated that the power utility would finance nuclear on its own, it’s since become clear it will require guarantees from government in order to obtain financing,” said Parsons.

“With the costs now being estimated at about R1 trillion, the concerns of transparency and consultation in the decision-making process remain overwhelming.”

Parsons said the fiscal vulnerability that was emphasised in the budget strengthens the need for caution before final decision can be taken over future energy options.

Gordon Mackay, Democratic Alliance spokesperson on energy, said he was not surprised that Gordhan did not speak about nuclear power, because there was no money in the fiscus for nuclear energy.

The signing option (of the contact) also won’t come from Treasury.

“That doesn’t mean there’s a slowdown in the nuclear agenda. It means that those who are tendering for the building of the power station will have to provide certain financing options.”

The French last week indicated that a full series of financing options were available, in similar vein to an indication by Rosatom of Russia.

“It can happen that the companies who are building the plants will cover the costs and that the debt will be paid back over a period of time. There are various financing structures.”

Michel Sapin, France’s minister of finance, earlier this month indicated that Électricité de France and Areva were eyeing a joint bid for the project and that France was in a position to fund it and also had the capacity to obtain finance for it.

The only money budgeted for nuclear energy in the South African budget is the usual state guarantee for R20 million for the Nuclear Energy Corporation of South Africa.

Zuma also only mentioned nuclear energy in passing during his state of the nation address, when he mentioned that renewable energy formed an important part of the energy mix which consists of gas, nuclear power, solar power, wind, hydro and coal.

In response to a question from Fin24, Gordhan on Wednesday indicated that the nuclear power project was in a very early stage and that in 2016, only R200 million was budgeted for the department of energy to do nuclear research.

“As the project continues, we will inform the public if any [public funds] are required.”

In the meantime, a case continues in the high court in Cape Town in which civil society organisations Earthlife Africa and the Souther African Faith Communities’ Environment Institute are challenging the lawfulness of an agreement that Tina Joemat-Pettersson, minister of energy, signed with Rosatom on behalf of the South African government in September 2014.

Earthlife is arguing Joemat-Pettersson and Zuma’s decision was unlawful and unconstitutional and will ask that the contract be set aside.

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March 17 2019