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Koeberg is more than a power supplier

Opinion
The Duynefontyn skyline, approximately 40km outside the Cape Town city centre, showcases Africa’s only nuclear power station, Koeberg. With an installed capacity of 1860 Megawatts, Koeberg plays a vital role in ensuring that Capetonians and South Africa at large have a reliable electricity supply.

The power station provides 50 percent of electricity consumed in the Western Cape and approximately 5 percent of the power used in the country. The positive impact that Koeberg has had dates back to 1984 when the first of the two units was connected to the national grid. To date, Koeberg has made an unblemished contribution to our nation, by creating a huge economic opportunity for South Africans.

Until recently, Koeberg’s economic impact in the Western Cape and South Africa had not been objectively and scientifically quantified.

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Koeberg Nuclear power station. Eskom has commissioned a study that has shown the multibillion-rand benefits of Koeberg, Africa's only nuclear plant, not only to the Western Cape but to the entire country. Photo: Henk Kruger

However, the 2017 KPMG study, titled Economic Impact Assessment of Koeberg Power Station, highlights the unique role played by the power station in South Africa.

Using a scientific methodology to arrive at its conclusion, KPMG underscores employment-creation and contributions to the gross domestic product (GDP) as vital contributions the power station makes.

Koeberg provides electricity reliably and safely through nuclear technology. Cheap costs of fuel make the plant efficient to run at base-load and leverage all sectors of the economy.

The station employs highly skilled workers contributing to skills development and transformation. Local spend in terms of suppliers, salaries, rates and taxes contribute to the fiscus.

While the study covered a small part of Koeberg’s 30-year life, KPMG’s conclusions provide a sneak preview of the kind of impact the power station has given rise to. Its daily operations are estimated to have sustained about 18000 jobs per year in the Western Cape, over the period 2012/13 to 2015/16.

An additional 18000 jobs per annum are expected to be created in the province over the period 2016/17 to 2019/20.

Koeberg’s operations have sustained 64000 jobs annually over the period 2012/13 to 2015/16 throughout the country and is expected to create and/or sustain an additional 61000 jobs annually over the period 2016/17 to 2019/20.

Read also: Koeberg nuclear power station gets glowing review

This is a valuable contribution, especially when considering the country’s high unemployment rate (26.5 percent in 2016 Q4) and 20.5 percent in the Western Cape.

But as we all know, it is not only about jobs, but the quality of jobs. Do they perpetuate poverty or are they capable of driving workers out of poverty? This question is vexed and many countries, globally, are also still wrestling with it.

Investment

The jobs at Koeberg are, inter alia, both the product of an investment that Eskom makes in maths, science and technology, but also sustain the continuing development in these areas of study.

Koeberg is run by South Africans from all walks of life and socio-economic backgrounds, which creates the desired socio-economic dividend for our country.

The Organisation for Economic Co-operation and Development (OECD) broadly considers three components to understanding the quality of employment, namely earnings, the risk of job loss and the quality of the working environment.

According to the organisation, “earnings quality captures the extent to which earnings contribute to workers’ well-being in terms of average earnings and their distribution across the workforce”.

Koeberg creates quality jobs that require highly-skilled employees in most cases. As a result, nuclear professionals earn salaries that are above the industry average and yet the plant is one of the most profitable in South Africa.

Given that the nuclear professionals at Koeberg are from all walks of life this creates a desired positive socio-economic impact that results in alleviating poverty.

This is substantiated by the KPMG report which found that capital projects and day-to-day operations at Koeberg led to a R20.7 billion impact on total household income in the Western Cape and R15.7 billion in the rest of South Africa, in the past four years.

Of this, about 12.6 percent of the additional household income generated will flow to low-income households in the Western Cape and 15.3 percent to low-income households in the in the rest of South Africa.

In total, an additional R36.5 billion is expected over the period 2016/17 and 2019/20. Of this, about 12.2 percent will flow to low-income households in the Western Cape and about 15 percent to low-income households in the rest of South Africa.

A secure and reliable electricity supply is essential for any economy. As result the electricity generated by Koeberg plays a vital role in propelling the growth of various industries. 

Inputs used by Koeberg in the electricity production chain come from various domestic sectors.  The interrelated linkages between different economic sectors stimulate positive economic activity that leads to growth.  Therefore, Koeberg’s role in the South African economy is not confined to electricity generation but to the wider economy and the society.

Sourced locally

Koeberg’s capital expenditure includes operational projects as well as plant and machinery. Total capital expenditure by Koeberg between 2012/13 and 2015/16 was in the order of R3.9 billion, of which 52 percent, on average, was sourced locally.

This expenditure increased the provincial GDP by about R30.2 billion and R23.1 billion has been added to national GDP between 2012/13 to 2015/16. It is expected Koeberg’s planned capital expenditure and operational spending between 2016/17 to 2019/20 will add an additional R29.6 billion to the Western Cape GDP and about R23.4 billion in GDP for the country.

Positive impact

Koeberg has a positive impact on national government flows. This is from the collection of taxes generated by linkages between Koeberg and its suppliers during capital projects as well as other daily operations. These aforementioned independent findings from KPMG clearly demonstrate the importance of Koeberg and its significance in the economy.

Finally, electricity has been a key driver of the country’s development over the past century and will continue to be a key enabler for economic growth and job creation going forward. 

Through its economy wide linkages, Koeberg has a great role to play in the South African economy going forward. The plant is not only operated at the highest level of safety, but is also very reliable.

The operating performance of Koeberg and the positive economic impact that the nuclear power station has in South Africa clearly shows that South Africa has the requisite skill and experience to consider nuclear technology as a base load option for the future.                                           

Velaphi Ntuli is Koeberg Power Station Manager.

BUSINESS REPORT

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