Johannesburg - Moving the procurement of the nuclear build programme from the Department of Energy to Eskom would allow for bad long-term decisions to be blamed on the power utility’s board and management instead of the government, a University of Johannesburg academic said yesterday.
Minister of Energy, Tina Joemat-Pettersson, on Tuesday told Parliament of her department’s intention to ask the cabinet to shift the procurement of the nuclear programme from the department to Eskom.
“This is a tactical move to try to turn this from being a government project, which would as a result be subject to direct oversight by Parliament and other watchdog bodies, to an initiative driven by a slightly more independent entity, that will claim the right to make its own business decisions,” said Hartmut Winkler, a physics professor.
Major role
Winkler said, while it was logical for Eskom to play a major role in the programme, “the main reason is that it is easier to push the deal through in a semi-separate entity such as Eskom, as opposed to a government department”.
Eskom has previously voiced its readiness to play a leading role in the nuclear programme. The utility has said that it is capable of funding the nuclear programme.
Eskom group executive for generation, Matshela Koko, last month pointed to the utility’s improving financial and operational stability over the next five years.
“This improving trend will continue over the medium to long term, which will culminate in the company having cash balances in excess of R150 billion by year 10 of the plan. These cash resources could be deployed to fund the new nuclear build programme,” Koko said.
But Winkler said that unless Eskom had “a massive” injection of cash, the utility could not finance the programme.
“Given that Eskom has been rated as junk by the rating agencies, the only way that they would be able to secure the necessary loans is by figuratively pawning off our existing power stations and the power grid.
“The creditors, which I suspect would be linked to the Russian nuclear enterprise Rosatom, would enforce massive annual repayment from Eskom, failing which Eskom would have to forfeit its infrastructure.
“The only way Eskom would be able to raise the capital for the annual debt repayment is through massive electricity cost hikes. Ultimately, the South African consumer will then have to foot the bill, over very many years, especially as Eskom has an effective monopoly of the electricity supply,” he said.
Commenting on the delayed request for proposals for the programme, Winkler criticised the handling of the programme so far. He said the request for proposals would have forced potential builders to lay their plans on the table, and subject these to public scrutiny and cost analysis.
“I think that would have raised a lot of public doubt regarding the wisdom of driving the nuclear build further.”
Opposition
WWF South Africa has maintained its opposition to the entire nuclear programme. The head of policy and futures unit, Saliem Fakir, said yesterday that going ahead with nuclear was a foolhardy option.
“We need to see whether it is justified under the new The Integrated Resource Plan or not. Our bigger worry is to fix the economy first before embarking on an expensive infrastructure programme.
“Reason and prudence are not prevailing. If, things do not go as planned and if Eskom’s debts balloon, the debt burden will be enough to put it and the country at financial risk. The consequences of a badly managed and costly programme are too frightening to contemplate,” he said.
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