ANC's nuclear lunacy is simply not affordable

02 August 2015 - 02:00 By Peter Bruce

We should all be paying much more attention to the government's firm intention to build three nuclear power stations in South Africa by 2030. Procurement begins at the end of this month. That's when the Department of Energy puts out a Request for Information, and describes more or less what it wants: 9600MW of nuclear-powered electricity from up to three locations. Later this year it publishes a Request for Proposals, and waits to hear from bidders in Russia, France, China, Korea and Japan how the 9600MW might be provided, how much their plant would cost and how it might be financed.We can't afford to pay for the build. We don't have the money. The finance minister hasn't budgeted for it and he won't have any spare funds for a decade. And, when he does, he is going to have to spend it on a national health insurance scheme first.story_article_left1So the money will have to come from somewhere else. There are just two possibilities:• The winning bidder builds and operates and we pay them back through higher electricity tariffs. I cannot see any of the bidders - especially not the favoured but broke Russians - being willing or able to do this. For the supplier, it is a very unstable arrangement; or• We borrow the money from a development institution. The World Bank wouldn't do it. Which leaves the Brics bank, the New Development Bank in Shanghai, about to be capitalised to the tune of $100-billion (about R1.2-trillion) by Brazil, Russia, India, China and South Africa.At least we are at the table. But if we are going to insist on 9600MW, we will have to tell our colleagues, almost immediately, that, ahem, we want #allthemoneyplease. By most informal estimates, $100-billionprobably covers the construction and financing in later years for that amount of nuclear power.We'll know how much our Brics partners love us when we ask them for a loan to fund a project of so little merit it has already been rejected by the latest version of the state's own energy plan and some senior presidential advisers.The Brics bank may be supposed to take on "risky" projects, but six to eight nuclear reactors, as a starter, for the tiniest economy in the group, has got to be fantasy. And even if Russia won the bid, they would have to recuse themselves from the committee that considers a South African loan request. No?Perhaps I don't understand the politics of emerging-market development financing. But I do remember that while we as South Africans were cheering the creation of the New Development Bank at a Brics summit in Russia last month, India's prime minister was tweeting about all the green energy projects the new bank would be financing.story_article_right2These political complexities notwithstanding, the government's prevailing line is that all of this is affordable. If you believe that, you'll believe anything. Quality education is "affordable", but most children don't have it here. Coal power stations are "affordable", but are still not built.The biggest problem the ANC has running this economy is taking the job seriously. It is almost as if it would be a sign of weakness to show concern, or pay attention to detail or to not know everything already. If detail were second nature or even important in the ANC, President Jacob Zuma wouldn't be in trouble over Nkandla and we would have the electricity we need.The fact is that, no matter how determined the government might be to press ahead with such a huge amount of nuclear power, it cannot yet have any idea of how to pay for it, or how much it will cost. The $100-billion mentioned doesn't include Eskom having to pay to extend lines, over land it will have to buy, through court cases it will have to fight, to the reactor locations under consideration.Frankly, I don't think this is going to happen. Zuma may be able to rip some money out of the Treasury, but he will face a rock at the Reserve Bank.By 2030 it will take about R20 to buy $1. Even if South Africa is able to borrow in rands from the Brics bank, the inflationary effect of the project will be significant - and the Reserve Bank has a duty to defend the economy from idiocy. Life here will get a lot more expensive a long time before any new South African nuclear reactor squeezes out its first spark...

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