President Jacob Zuma and Russian President Vladimir Putin.
President Jacob Zuma and Russian President Vladimir Putin.

Nuke deal a two-decade debt millstone

Time of article published Oct 1, 2014

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The apparent nuclear power deal with the Russians is a slow-motion replay of the arms deal on a far bigger scale, says Mike Wills.

Cape Town - Here we go again. The apparent nuclear power agreement with the Russians is a slow-motion replay of the arms deal on a far bigger scale. By the time the compromised Seriti commission of inquiry finally gets some sort of report out on the last mess, it might as well just stay in session and start the hearings on the next one.

There are so many disturbing things about this, including much of the world cutting business ties with Russia on moral grounds, but the worst is the lack of transparency and due process on what will be the biggest financial commitment ever made by this nation.

We will spend more on many other things over the lifetime of this putative deal but all of those costs are variables – we can cut them at budget time if we have to – whereas this represents an immovable two-decade debt millstone which cannot be shifted without defaulting.

A report that Pravin Gordhan refused to provide the necessary guarantees for this deal when he was still finance minister is deeply disturbing. If that’s true, then Gordhan owes it to the nation to speak up.

His predecessor Trevor Manuel’s reputation is indelibly tarnished by his complicity in the arms deal, I hope Gordhan doesn’t go the same way on this one.

A deeply weird echo of the arms deal is the belief in some quarters that we won’t actually pay that much for our 9.6GW of power. Remember Alec Erwin’s laughable “offsets” for the expensive military toys?

Well, one version of the complex financing deal proposed for our fancy new nuke kits shifts all the funding and up-front investment on to the Russians – hey presto nothing smelly on our books – but the inevitable catch lies in the guarantees, the long inflated price lock-in on the output and who pays for the inevitable, monumental cost over-runs and delays. And then there’s the not-so-small matter of who pays the real costs of safely decommissioning the plants when they reach the end of their life spans.

I don’t hold a strong view against nuclear power – it may well be the best option for us and I’m happy to let others determine that. And I certainly don’t mind the Jacob Zuma administration being, for once, decisive on a major issue and making the big call.

But it was vital that this process be broken into smaller and more manageable parts – the bigger the deal, the bigger the bribes and the bigger the cracks for all kinds of inefficiencies and corruption to disappear into.

I’ve yet to see a compelling argument for a sole provider – if we need eight plants then we could have at least two, and possibly three, competing contractors. And it was equally important that each step was open and methodical – everything on the table rather than under it. Instead we got the opposite. Zuma seems to have taken personal control, sidelining parliament, Eskom, the Energy Department and even the ANC national executive committee.

* Mike Wills’ column Open Mike appears in the Cape Argus every Wednesday.

** The views expressed here are not necessarily those of Independent Newspapers.

Cape Argus

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