Nuclear Monitor #792, 2 Oct 2014, www.wiseinternational.org/nuclear-monitors
Author: Jim Green − Nuclear Monitor editor
South Africa and Russia signed an 'Intergovernmental Agreement on Strategic Partnership and Cooperation in Nuclear Energy and Industry' on September 22. The South African government envisages construction of eight Russian VVER reactors with a total capacity of 9.6 GW.1,2 Currently, two Areva-supplied reactors at Koeberg generate about 5.3% of the country's electricity.3
The agreement also provides for collaboration in other areas, including construction of a research reactor; assistance in the development of nuclear power infrastructure; and training at Russian universities and elsewhere.1 Rosatom's Director General Mr. Sergey Kirienko said: "Rosatom seeks to create in South Africa a full-scale nuclear cluster of a world leader's level – from the front-end of nuclear fuel cycle up to engineering and power equipment manufacturing. In future this will allow to implement joint nuclear power projects in Africa and third countries."2
Zizamele Mbambo, Deputy Director General for Nuclear Energy in South Africa's Department of Energy, said: "We underscore the nuclear programme that is broader and it includes nuclear fuel cycle facilities, nuclear component manufacturing facilities, skills development infrastructure, regulatory infrastructure and of course the nuclear power plants, amongst others," says Mbambo.4
A full suite of nuclear fuel cycle facilities and a nuclear export industry for South Africa? Not so fast. The September 22 agreement is not a binding contract for reactors let alone the full suite of nuclear fuel cycle facilities, and it has been greeted with some scepticism in South Africa. The independent IOL newspaper said the agreement was "accompanied by much wheeling out of mirrors and blowing of smoke" and warns that a massive nuclear program "could see the country saddled with a R1 trillion white elephant and the financial headache to go with it".5
IOL notes that the agreement violates numerous provisions of the South African government's the Integrated Resource Plan6 (IRP), updated in late 2013, which puts numerous conditions on any future decision to build new reactors. IOL notes that the nuclear push contradicts IRP specifications regarding economic growth (which has significantly undershot expectations), and the costs of alternative energy sources (the costs of renewables have continued to drop and the government's renewable energy procurement program has been "hugely successful").5
According to a 'decision tree' outlined in the IRP, a decision on nuclear power could be deferred until 2018 if progress is made on the planned Grand Inga hydroelectric project. In August, South Africa ratified a treaty with the Democratic Republic of Congo to co-operate on the Grand Inga project. The IRP specifies other conditions that should be met before a decision is taken regarding nuclear power − conditions that are unlikely to be met: net electricity generation of at least 265 terawatt hours in 2014; "no expectation of large-scale gas development"; and nuclear capital costs no greater than US$6,500/kW (€5,100/kW). If those conditions are not met, the IRP states, "then the procurement should be abandoned as the additional cost would suggest an alternative technology instead".5,6
The IRP notes that a "persistent and unresolved uncertainty surrounds nuclear capital costs" and further states: "The revised demand projections suggest no new nuclear base-load capacity is required until after 2025 [and for lower demand not until at earliest 2035] and that there are alternative options ... before prematurely committing to a technology that may be redundant."6,7
Tom Harris, a research analyst with Frost & Sullivan Africa, notes that in all of the most realistic scenarios outlined in the IRP, "the nuclear option is either discounted completely, suggested to be delayed, or allocated far less than the 9 600 MW of capacity now suggested by our energy minister".4
Jumping the gun
While Rosatom is congratulating itself on a 50 billion dollar deal, a South African government source told Reuters that "they jumped the gun": "These kinds of inter-governmental agreements are standard with nuclear vendor countries. We foresee that similar agreements will be signed with other nuclear vendor countries, France, China, Korea, the U.S. and Japan." Xolisa Mabhongo from the South African state agency Nuclear Energy Corporation said there would be a bidding process before any contracts are signed and that other inter-governmental agreements are envisaged.8
Neutron Bytes blogger Dan Yurman wrote on September 28: "Where the wheels start to come off in South Africa is that the Treasury Dept told an energy committee in Parliament this week it had no clue about the deal or how the country would pay for it. For its part, the Energy ministry told Parliament it was still working on a [US]$27 billion energy package which, at $6500/Kw, would deliver four reactors. Finally, the ANC, Zuma's home party and source of his political base, told the newspaper it had no idea there was an impending nuclear deal until Rosatom announced it."9
A 2013 report commissioned by South Africa's National Planning Commission and produced by University of Cape Town's Energy Research Centre found that "nuclear investments are not necessary [at least in the next 15 to 25 years] nor are they cost effective based on the latest cost data. Gas options should be explored more intensively and hydro projects from the region should be fast-tracked. Many of the low emission alternatives to nuclear capacity [imported hydro, wind and natural gas] can be installed at lower cost with shorter lead times, in smaller increments, reducing the risk of overbuild." It further stated that the government's plans for nuclear power risk resulting in "surplus, stranded and expensive generation capacity".7
The South African Business Times newspaper raises concerns about secrecy and impropriety: "There are worrying signs that the South African Nuclear Energy Corporation (Necsa) itself has behaved with impropriety. Earlier this year, it emerged that it had spent R76 000 on a table at an ANC election fundraiser ahead of the general election. Necsa CEO Phumzile Tshelane commented: "Necsa does a cost-benefit analysis and says: 'Can we see the benefit of talking to ministers of trade and industry and energy ... by paying for the table?' So far the nuclear acquisition process has been anything but transparent. There has already been extensive contact − all behind closed doors − between government and potential bidders."7
Concerns have been raised about whether secretive negotiations and deals comply with South African law, such as section 217(1) of South Africa's constitution which states that: "When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective."10
References:
1. 23 Sept 2014, 'South Africa signs $10 billion nuclear deal with Russia',
www.world-nuclear-news.org/NN-South-Africa-signs-10-billion-nuclear-agre...
2. 'Russia and South Africa sign agreement on Strategic Partnership in Nuclear Energy, 22 Sept 2014, Media Release, www.energy.gov.za/files/media/pr/2014/MediaRelease-Russia-and-SA-sign-ag...
3. www.world-nuclear.org/info/Country-Profiles/Countries-O-S/South-Africa/
4. Babalo Ndenze, 7 Sept 2014, 'State determined to go ahead with nuclear plans', Sunday Independent, www.iol.co.za/news/politics/state-determined-to-go-ahead-with-nuclear-pl...
5. 27 Sept 2014, 'Disquiet over nuclear 'deal''
www.iol.co.za/news/disquiet-over-nuclear-deal-1.1756743
6. 21 Nov 2013, 'Integrated Resource Plan for Electricity (IRP) 2010−2030', www.doe-irp.co.za/content/IRP2010_updatea.pdf
7. Ray Hartley, 3 Aug 2014, 'Nuclear, come hell or high water', Business Times,
www.bdlive.co.za/businesstimes/2014/08/03/nuclear-come-hell-or-high-water
8. Sep 23, 2014, 'South Africa says nuclear power deal with Russia in early stages', http://af.reuters.com/article/southAfricaNews/idAFL6N0RO23K20140923
9. Dan Yurman, 28 Sept 2014, 'South African nuclear deal faces critics',
http://neutronbytes.com/2014/09/28/south-african-nuclear-deal-faces-crit...
10. Dirk de Vos, 25 Sept 2014, 'Analysis: Why we won't be getting any nuclear power plants from Russia anytime soon'
www.dailymaverick.co.za/article/2014-09-25-analysis-why-we-wont-be-getti...