It would be better to let President Jacob Zuma build a Nkandla-style homestead in every major city in South Africa than to allow him to sign off the current proposal to build new nuclear plants.
South Africans are familiar with uncovering corruption in large government deals after the deed is done. In 1999, the controversial Arms Deal purchased $4.8 billion worth of weaponry (R30bn at the time). Corruption investigations implicated Zuma and Thabo Mbeki, among others, and suggested that more than R1bn in bribes were paid in the process.
Zuma’s decision to spend R246 million of tax revenue on Nkandla caused public furore and brought parliamentary proceedings to a halt - eventually leading to a court ruling that he should pay back the money.
In the next instalment of abuse of state funds, we must not wait until the deal is signed off to repel its flaws. Zuma and Eskom intend to construct up to eight nuclear power stations to add 9.6 gigawatts to South Africa’s energy generation capacity.
The total deal is expected to cost more than $100bn (R1 trillion). As the weight of that is lost in just two words, it’s best to put it into perspective: it’s equivalent to more than 20 arms deals. Zuma’s public spending on Nkandla could be repeated 5 516 times with the money needed for the nuclear plants.
Level of secrecy
These examples are not strictly comparable, as theoretically the nuclear plants will contribute to the economic growth of South Africa, whereas presidential homesteads and weaponry don’t.
But the levels of secrecy involved in the nuclear deal, Zuma’s track record of corruption, increasing details on state capture, Eskom’s deliberate obstruction of increased renewable capacity and the link between the firing of Nene and the nuclear deal clearly indicate that this is not a project driven for economic growth.
In addition, the Council for Scientific and Industrial Research and other institutions have slammed the motivation for nuclear energy, proving through various models that South Africa’s energy needs can be met cheaper and faster with a combination of existing coal capacity and new solar, wind and gas plants.
At current cost estimates (excluding the risk of commodity price increases and rand depreciation), this will require the government to pay in excess of R100bn per year in debt repayments for 20 years. Current debt servicing costs are already forecast to exceed R147bn this year and the only way the government can afford an additional R100bn per year is through higher taxes or decreasing spending in other areas of the economy.
The annual amount is more than the government spends on post-school education and training (R68.6bn) and almost four times what it spends on agriculture, rural development and land reform (R26.3bn). New nuclear generation may help economic growth, but at that price, we could double our spending on universities and still have R30bn per year left to support independent power production.
Zuma’s nuclear deal is not an economically motivated proposal. If R1bn can be syphoned off a R30bn arms deal, an unneeded R1.4trln nuclear deal is going to grease a lot of palms while locking South Africa into stagnation.
South Africa’s nuclear state agency, Nesca, says that the bidding process for construction is open but Russia’s state energy corporation - Rosatom - is openly confident that it will win the contract.
For now, the Department of Energy has delayed the Request for Proposals (RFP) for the nuclear build programme as the Integrated Resource Plan - which sets the long-term strategy for South Africa’s energy provision - needs to be revised before the RFP can be released. Civil society needs to get involved in this process.
If we allow this deal to go through it will go down as part of Zuma’s legacy, but we will only have ourselves to blame. Zuma knows that public resistance will ultimately win and so for him to benefit the transaction needs to be signed before he steps down as president: it’s a race between him and public awareness of the nuclear deal’s implications.
Nhlanhla Nene and Pravin Gordhan have played strong roles in trying to block the project. We must follow their lead.
* Pierre Heistein is the instructor of UCT’s Applied Economics for Smart Decision Making course. Follow him on Twitter @PierreHeistein
* The views expressed here do not necessarily reflect those of Independent Media.
BUSINESS REPORT