SA ready to roll out R300bn nuclear stations

GOVERNMENT is going ahead with plans to build nuclear power stations - signalling a scrap by local and international companies to get a slice of the staggering R300-billion tender.

National Treasury this week revealed the rollout - which will see the construction of the plants along the country's coastline - would ensure a supply of an extra 9600 megawatts of electricity. The stations are expected to be fully operational by 2029 and will be the largest infrastructure programme undertaken by government.

Energy Minister Dipuo Peters is already on record as having said that costs could escalate to around R1-trillion. She later backtracked on this figure.

It is understood that Chinese and French companies are eyeing possible involvement in a deal that dwarfs the R65-billion arms procurement - with a tender to be issued within two years. The project was first considered under former president Thabo Mbeki.

But Eskom, which will manage and operate the stations, put the tender on hold in September 2008 amid concerns over costs.

But, faced with rising demand for electricity and climate change requirements that force coal-reliant South Africa to diversify its energy sources, the deal is now back on the table.

In terms of the Integrated Resource Plan, the country's energy mix requires that 42% of all new capacity to be generated from renewable sources, 23% from nuclear, 15% from coal, 9% from liquid fuels, 6% from natural gas and the rest from imported hydro power.

Peters has already submitted a nuclear plan to cabinet while an inter-ministerial committee, comprising ministers of energy, public enterprises, finance, water and environmental affairs, has been thrashing out the details of the roll-out.

National Treasury has finally included the costs in its budget, allocating R300-billion over a 17-year period.

Conflicting messages over the costs have raised concerns from industry players about the capacity of the Energy Department to manage the project. Last October, Peters told news agency Reuters that it would cost R1-trillion. But she changed her tune in December at the COP17 Climate Change conference in Durban, saying it would be in the region of R400-billion.

An international expert in nuclear power technology said he was worried that a project of this magnitude would overwhelm the department.

"The department (of energy) has no competency. They are weak. They want to lead a process that is 100 times bigger than they can manage. Eskom should lead this project because they have the competency."

The expert, who refused to be named, said if Eskom played a leading role, it would make sense to get the Department of Public Enterprises to oversee the project.

Public enterprises confirmed that it would lead the procurement of nuclear power technology and the building of power stations. Spokesman Mayihlome Tshwete said they expected talks with industry players to begin sometime this year.

"We would expect that a tender would need to be advertised within the next two years. It is likely that at least the initial engagements with industry will happen during this year."

The construction of a single nuclear power plant takes about 10 years and the department is hoping to move fast to ensure that this happens.

"We have a year or two to get our frameworks for the procurement sorted out. Even then, there are some things that can be done to shorten the 10 years as the actual construction period is shorter, it is the ancillary stuff (for example environmental approvals) that add the time requirement," Tshwete said.

It is anticipated that the building and management of these power plants could create 300000 direct and indirect jobs.

Rolling blackouts are threatening South Africa's viability as an investment destination and large factories have already been ordered by government to decrease their consumption by 10%.

Eskom is building two coal-fired plants - Medupi and Kusile - that are expected to start operating in 2013 and 2014.

They are expected to generate more than 9000 megawatts of electricity when they are fully operational in 2018.