A draft energy plan recommends that South Africa's nuclear power program should be deferred ‒ yet state-owned utility Eskom wants to press ahead.
A draft of the government's Integrated Resource Plan (IRP) proposes increasing nuclear power capacity by as little as 1.36 gigawatts (GW) by 2037, compared to a previous target of adding 9.6 GW of new capacity by 2030.1 Start-up of new reactors is pushed back from 2023 in the 2010 IRP to as late as 2037. The government cited additional generation capacity, lower demand forecasts and changes in technology costs among the reasons for the revisions.2
Energy spokesperson Gordon Mackay from the largest opposition party, the Democratic Alliance (DA), said the draft IRP "deals a serious blow to President Zuma's attempts to finalise a corrupt and unnecessary nuclear deal. The Minister [Tina Joemat-Pettersson] must be commended for her bravery in standing against the prevailing winds of state capture and bequeathing the South African people the legal and statutory basis to challenge an irrational and ruinous nuclear deal."3
The 2010 IRP promoted nuclear power but the 2013 IRP did not ‒ it suggested that any decision on nuclear should be deferred well into the future. However the 2013 IRP was never adopted and so only has unofficial status.4,5 Given that history, it is an open question whether the draft 2016 IRP will be accepted. The plan is for the draft IRP to be revised by March next year and then submitted to the cabinet for final sign-off.6
Eskom, which will procure, own and operate new nuclear plants, said it will still issue a 'Request for Proposals' (RFP) from international nuclear vendors by the end of this year. Eskom cited the long lead-time to build nuclear plants to justify its decision, and said that testing the market with a RFP is not the same as entering a contract. The utility said its plans are closely aligned to the 2016 IRP, but in fact Eskom envisages 6.8 GW of new nuclear capacity by 2030.7
Whether a RFP will elicit any responses in the current political environment is an open question. Numerous vendors have expressed interest in recent years, but the nuclear program is now shrouded in allegations of corruption, and President Jacob Zuma's days are numbered. Johan Muller from the Frost & Sullivan consultancy told Reuters: "If I was an investor or project developer in the nuclear space, I would not pick up a pen before the IRP is finalised next year to submit any request for proposals, specifically considering the dark cloud hanging over the nuclear program with alleged corrupt relationships."2
Democratic Alliance spokesperson Gordon Mackay said the RFP should be deferred until the IRP has passed public consultation and been adopted by Parliament. He further noted that the RFP would be open to legal challenge as it would be issued "on the basis of an outdated and legally dubious Section 34 Ministerial determination, itself based on the much maligned and now out of date IRP 2010".8
Hardly anyone supports South Africa's nuclear power program other than the corporates and kleptocrats who stand to directly benefit from it. Business interests, other than those with a direct interest, are overwhelmingly opposed.
The rand strengthened on the news that nuclear power was downgraded and deferred under the draft IRP.9
The Cape Chamber of Commerce and Industry said it is "delighted to see that the new Integrated Resource Plan (IRP 2016) says there is no need for more nuclear power in South Africa before 2037". Chamber President Janine Myburgh said: "This means that we will not have to make a decision on building new nuclear power stations for the next 10 years and by that time we will be in a better position to judge the performance and cost of renewable energy."10
The Cape Chamber added that "one worrying factor about the new IRP was that it did not include a scenario in which there were no artificial restraints on renewable energy and the effect this would have on the case for nuclear power." The draft IRP imposes annual limits on the installation of new renewable power capacity.
Dawie Roodt, an economist formerly with South African Reserve Bank, said: "We don't even need a deal like this to sink the South African economy. We are already in seriously deep trouble. If you add this to the economy, I'm afraid it's going to be fatal. This nuclear deal cannot happen now. You cannot enter into an agreement with anybody else at this stage because there's too much homework that we need to complete first."11
Responding to the draft 2016 IRP's downgrading and deferral of nuclear power, Jana Van Deventer, an economic analyst at ETM Analytics in Johannesburg, said: "It's been postponed so far down the line that by the time we get there nuclear energy might possibly be obsolete and not be a viable option anymore. This latest development potentially means that any nuclear power deal is off the table for the time being."9
The rise and fall of President Jacob Zuma
The likely deferral of the nuclear program is inevitably seen through the prism of President Zuma's fortunes. Zuma is scheduled to step down as leader of the governing African National Congress next year, and his second and final term as president ends in 2019.
Zuma may not last that long: he faces internal revolt within the ANC and so-far unsuccessful votes of no confidence in Parliament.12,13
Bloomberg reported: "South Africa's decision to stall plans championed by President Jacob Zuma to build nuclear plants has exposed his waning authority. ... While Zuma says reactors are key to addressing power constraints in Africa's most-industrialized economy, Finance Minister Pravin Gordhan, economists and ratings companies warn that South Africa can't afford them now."14
If Zuma had his way, the most likely outcome is that Finance Minister Pravin Gordhan would have been pushed aside (indeed he never would have been appointed in the first place), the draft IRP would never have been released, and the nuclear program would be moving ahead at pace.
Robert Schrire, a politics professor at the University of Cape Town, said: "Essentially the project has been indefinitely postponed and the final decision on nuclear power will only be taken by Zuma's successor. This is a great victory for economic rationality and political expediency and reflects the new political balance of a weakened Zuma administration."14
Keith Gottschalk, a political scientist from the University of the Western Cape in Cape Town, said Zuma is "still able to out-vote and out-maneuver his opponents in the ANC, but the mounting pressure has meant he has not been able to always get his own way all the time. He is on the way down like a slow-leaking puncture."14
The nuclear debate is occurring in the context of a wide-ranging debate over corruption. On November 2, the Office of the Public Protector released a State of Capture report that details evidence of corruption and is critical of the executive for failing to act on claims that there had been interference in the appointment of cabinet ministers.15 The report orders Zuma to appoint a commission of inquiry within 30 days and for it to be headed by a judge who has the same powers as the public protector.
Hartmut Winkler, Professor of Physics at the University of Johannesburg, said: "Unsurprisingly, the nuclear industry and its supporters have reacted very negatively to the new draft [IRP]. Strong nuclear advocates in the state electricity utility Eskom have gone so far as to defiantly declare that they will invite nuclear construction proposals before the end of the year. But Eskom's defiance is unlikely to lead to anything substantial. This is because the state utility is facing both a credibility crisis and its finances are in poor shape."16
Eskom's 'credibility crisis' relates to, among other things, evidence of its questionable and possibly illegal dealings with the powerful Gupta family and Gupta associates.17
Another issue taken up in the State of Capture report concerns the dismissal and appointment of a succession of finance ministers.18 On 9 December 2015, Zuma sacked finance minister Nhlanhla Nene, who said he wouldn't sign off on the 9.6 GW nuclear program if it was unaffordable, and wouldn't be swayed by political meddling. Nene was replaced by little-known backbencher David van Rooyen. The rand plummeted. Four days later, Zuma was forced to replace van Rooyen with Pravin Gordhan. According to the State of Capture report, the mystery of van Rooyen's appointment was connected to the Gupta family wielding undue political influence.14,19
In November 2016, prosecutors withdrew fraud charges against Gordhan for allegedly approving a pension payment to a tax agency official. The Democratic Alliance alleged that Zuma planned to use the court case as a pretext for firing Gordhan and in the process removing the biggest obstacle to his nuclear ambitions.14
Mmusi Maimane, leader of the Democratic Alliance, said: "South Africans should be deeply concerned about the government's nuclear project. Let's be clear. It is in no way motivated by a genuine desire to secure South Africa's energy future in the most cost effective and sustainable way. Rather, this huge project is going ahead because Zuma, the Guptas and other ANC elites stand to make millions in bribes and tenders. ... In forging ahead with this ill-conceived plan, our hapless government is locking SA into an over-priced, outdated technology within Eskom's monopoly, while blocking the development of renewables which are dynamic, increasingly cost-effective and more job-creating."20
Jackie Cameron sums up the current, sad situation in Biznews: "The twists and turns in the political stories unfolding in South Africa read like an over-the-top action thriller. There are allegations of deals struck in secret between President Jacob Zuma and Russian heavyweights. Then there are suspicions that the president's associates, including three brothers from India, have been involved in a chess-style plot to seize control of South Africa's state organisations. This strategy is going so well, the narrative goes, that billions of rands have been siphoned out of government coffers. Add to the mix an antagonist in the form of fearless Public Protector Thuli Madonsela, who has been working tirelessly in the face of intimidation to unpack the deception. And, let's not forget an economic superman in the form of finance minister Pravin Gordhan, who is believed to be blocking a deal with Russia – and stands between South Africa and the end of the world as we know it."21
Perhaps the nuclear program will die when Zuma's presidency ends ... or perhaps there are enough kleptocrats inside the government and the state apparatus to keep it alive. Keith Gottschalk from the University of the Western Cape takes the optimistic view: "The biggest consequence of Zuma's removal would be that his cronies and agents in state departments and parastatals would be purged. This would mean the end of Zuma's reign, heralding a new era of honest government and better use of taxpayers' money."22
1. Department of Energy, 2016, 'Integrated Resource Plan, www.energy.gov.za/IRP/irp-2016.html and www.gpwonline.co.za/Gazettes/Gazettes/40445_25-11_NationalGovernment.pdf
2. Reuters, 22 Nov 2016, 'South Africa slows nuclear power expansion plans', www.reuters.com/article/us-safrica-power-idUSKBN13H180
3. Gordon Mackay, 22 Nov 2016, 'It's DoE vs Eskom as Integrated Resource Plan says no to nuclear – Gordon Mackay', www.politicsweb.co.za/politics/its-doe-vs-eskom-as-integrated-resource-p...
4. 25 Nov 2016, 'South Africa: Understanding the Court Challenge to the Nuclear Deal', http://allafrica.com/stories/201611250810.html
5. Anton van Dalsen, 19 Nov 2016, 'The govt's policy on nuclear power', www.politicsweb.co.za/opinion/the-govts-policy-on-nuclear-power
6. Paul Vecchiatto and Michael Cohen / Bloomberg, 22 Nov 2016, 'South Africa Slows Nuclear Plans as Rating Assessments Loom', www.bloomberg.com/news/articles/2016-11-22/south-africa-delays-nuclear-p...
7. 7. WNN, 23 Nov 2016, 'Eskom procurement plan unchanged by lower capacity target', www.world-nuclear-news.org/NP-Eskom-procurement-plan-unchanged-by-lower-...
8. Gordon Mackay, 23 Nov 2016, 'Nuclear deal: Eskom must suspend Request for Proposals', www.politicsweb.co.za/politics/nuclear-deal-eskom-must-suspend-request-f...
9. Xola Potelwa, 22 Nov 2016, 'Rand Leads Currency Gains as South Africa Delays Nuclear Program', www.bloomberg.com/news/articles/2016-11-22/rand-leads-currency-gains-as-...
10. Dean Le Grange, 23 Nov 2016, 'IRP says no need for more nuclear power – Janine Myburgh', www.politicsweb.co.za/politics/irp-says-no-need-for-more-nuclear-power--...
11. 15 Sept 2016, 'Brilliant – How Zupta's nuclear deal will sink SA', www.biznews.com/sa-investing/2016/09/15/brilliant-how-zuptas-nuclear-dea...
12. 29 Nov 2016, 'The enemy wants to jail me, Zuma tells NEC', www.vocfm.co.za/enemy-wants-jail-zuma-tells-nec/
13. Peter Dube, 30 Nov 2016, 'Zuma survives ouster bid but faces vote of no confidence', www.nation.co.ke/news/africa/1066-3469260-format-xhtml-mlruggz/index.html
14. Michael Cohen and Paul Vecchiatto, 23 Nov 2016, 'Zuma's Waning Power Exposed by Stalled South Africa Nuclear Plan', www.bloomberg.com/news/articles/2016-11-23/zuma-s-waning-power-exposed-b...
15. 14 Oct 2016, 'State of Capture', a Report of the Public Protector, http://mg.co.za/article/2016-11-02-breaking-read-the-full-state-capture-...
16. Hartmut Winkler, 29 Nov 2016, 'What's next for SA energy, now that Russian nuclear build is on ice? Expert unpacks the plan', https://www.biznews.com/sa-investing/2016/11/29/sa-russia-energy-nuclear...
17. Siseko Njobeni, 3 Nov 2016, 'Eskom, Gupta dealings exposed', www.iol.co.za/business/companies/eskom-gupta-dealings-exposed-2086293
See also: Jessica Bezuidenhout, 25 Nov 2016, 'Eskom's ties to Gupta-linked Trillian exposed', http://mg.co.za/article/2016-11-25-00-eskoms-trillian-links-exposed
18. 17 Dec 2015, 'South Africa's nuclear power program', Nuclear Monitor #816, www.wiseinternational.org/nuclear-monitor/816/south-africas-nuclear-powe...
19. Conor Gaffey, 3 Nov 2016, 'South Africa: Five Things Thuli Madonsela's State Capture Report Told Us', http://europe.newsweek.com/south-africa-five-thuli-madonsela-state-captu...
20. Mmusi Maimane, 16 Sept 2016, 'Zupta's nuclear deal: either we end it or it ends us', www.da.org.za/2016/09/bokamoso-zuptas-nuclear-deal-either-end-ends-us/
21. 13 Oct 2016, 'State capture claims: For real? Unpacking #Zupta nuclear conspiracy theory', www.biznews.com/leadership/2016/10/13/state-capture-claims-for-real-unpa...
22. Keith Gottschalk, 30 Nov 2016, 'Zuma lives to fight another day. But fallout from latest revolt will live on', https://theconversation.com/zuma-lives-to-fight-another-day-but-fallout-...