Johannesburg - Questions hang over the cost of building power plants to secure South Africa’s energy supplies, as load shedding is cited by local and international economists as a brake on domestic economic growth.
Parliamentary replies by ministers leave unanswered the exact details of the cost of South Africa’s proposed nuclear build to secure 9 600MW of electricity, while costs have escalated for Eskom’s much-delayed Medupi coal-fired power plant, one of two such six-unit plants to bring 9 600MW on stream.
With the procurement for the proposed six nuclear reactors getting under way this month, Energy Minister Tina Joemat-Pettersson, in her parliamentary reply said her department’s study had provided expenditure benchmarks, while studies in conjunction with other departments showed the nuclear programme was “financeable”.
However, the minister gave no cost indications for the nuclear power programme, for which a strategic partner is expected to be in place by the end of the financial year in April 2016.
It has been speculated that costs could run to anywhere between R400 million and R1 trillion.
“The true test of affordability for nuclear power will be in the price and financial offering provided by technology suppliers (nuclear vendor countries) during the procurement process,” replied Joemat-Pettersson.
A month ago, she tabled in Parliament the five inter-governmental agreements, or preparatory steps, to a possible co-operative and/or commercial relationship with Russia, South Korea, the US, France and China.
“The exact mechanism of financing is dependent on the market response. The market can only be tested during the procurement process.”
But DA MP Gordon Mackay on Sunday said he wants the minister to disclose the criteria and steps of that procurement process before it begins.
“What is required is clarity before the procurement process starts. Minister Joemat-Pettersson cannot put the cart before the horse… by going ahead with the bidding process, while stakeholders and the public remain in the dark as to what the process will be, how the deal with be funded and where the funding will come from.”
Mackay was responding following previous DA concerns that costs would be passed on to consumers through tariff hikes. “Funding arrangements such as the Russians promising to fund the build and operation themselves cannot be the basis for procurement. The basis must be about suitability and affordability,” he pointed out.
Following a parliamentary committee briefing earlier this year, Energy Department officials said the R1 trillion price estimate was an exaggeration, but did not want to give a rand and cents price tag, except to say the “significant investment” would pay for itself many times over.
The lack of details on the nuclear costs comes as the latest cost for Medupi power station have been put at R105 billion, or effectively R36bn more than the initial price tag, three years after the project was meant to come on stream from 2012.
In a parliamentary reply that appears to leave doors open to further cost escalations, Public Enterprises Minister Lynne Brown dismissed speculation that the ultimate completion cost would run to R300bn, saying the “current approved cost to completion” of Medupi was R105bn.
Political Bureau
The Star