Eskom’ nuclear deal could put us in debt

The writers have dismissed Energy Minister Tina Joemat-Pettersson's assumption that nuclear investments would cost the same as renewable energy as baseless. File picture: Elmond Jiyane

The writers have dismissed Energy Minister Tina Joemat-Pettersson's assumption that nuclear investments would cost the same as renewable energy as baseless. File picture: Elmond Jiyane

Published Oct 29, 2016


Pravin Gordhan’s refusal to sign a blank cheque makes him a target, write Melita Steele, Robyn Hugo, Bobby Peek and Dominique Doyle.

Between Eskom’ public anti-renewable energy campaign, claims of #StateCapture around the nuclear deal being at the heart of moves against Finance Minister Pravin Gordhan, energy investments going ahead based on a badly outdated plan, and the SA Wind Energy Association taking steps to hold Eskom accountable for its unwillingness to sign new power purchase agreements (without which, new renewable energy projects cannot connect to the grid), it’ difficult to keep track of what is going on in South Africa’ turbulent energy landscape.

The secrecy around nuclear continues, as does the pro-nuclear propaganda, which now seems to count Eskom among the ranks of those trying to sway public opinion in favour of hugely expensive nuclear power.

This is despite calls for greater transparency and accountability, and moves from the portfolio committee on energy to gain more information about why nuclear investments are going ahead in a country ravaged by massive inequality, steeply rising electricity prices, a food crisis, a crisis in the education sector and a possible downgrade to junk investment status. The battle over the Treasury seems also to have nuclear investments at its core, with Gordhan allegedly refusing to sign a blank cheque, making him a target.

Money (and not affordable, clean, accessible electricity) is at the centre of the energy crisis. This means Eskom is playing a game of brinkmanship with renewable energy investments.

In a recent announcement, Energy Minister Tina Joemat-Pettersson argued that renewable energy would also cost the country R1 trillion (the same amount of money that new nuclear investments would cost). This assumption is baseless.

As Energy Minister, Joemat-Pettersson is tasked with taking an unbiased approach to energy investments and making decisions that ensure that energy choices benefit the people. Investments under the Renewable Energy Independent Power Producers Procurement (REIPPP) Programme have been almost 100% from private investors and companies, and have been extremely beneficial for Eskom’ balance sheet and the country’ credit ratings, pouring foreign direct investment into the country when many are running scared.

We need to understand that Eskom is not borrowing money from any institutions for investing in the REIPPP Programme (capital costs) or any renewable energy investments: only the connection and transmission costs are borne by Eskom.

As with any electricity investment, there are costs associated with connecting projects to the grid and ensuring distribution to consumers, but these are true for every single electricity type - not just renewable energy projects.

Eskom is disingenuously trying to depict renewable energy as expensive and unreliable. Both Eskom and Joemat-Pettersson have supported the notion that Eskom will be the operator of the new nuclear build programme: if this is the case, then we have taken another step backwards in transparency and accountability.

In addition, the cost implications will come from the balance sheets of Eskom, thus burdening the people with debt for decades to come.

Added to this, either Eskom or the Treasury has to set aside a tremendous amount of money for liability in case of a nuclear accident.

The question that needs to be asked is: who will disproportionately bear all of these costs? Rather, it is the country’ economy and citizens who will be left with the bill.

Eskom argues that blackouts are a thing of the past, and so new renewable energy investments are unnecessary (while simultaneously arguing that nuclear investments are critical).

Eskom should not support the new nuclear build programme in a struggle for relevance - it needs to move with the times and increase its own renewable energy investments. It is critical that South Africans are aware that the projected cost of nuclear by the Department of Energy and Eskom does not take into account tax effects, decommissioning, long-term waste disposal, or plant life extension costs, never mind the potentially catastrophic liability costs in case of an accident.

The massive delays and cost overruns at Medupi and Kusile are stark examples of Eskom’ inefficiency.

Eskom needs to start focusing on what it is supposed to be doing - delivering electricity - and must start upgrading the grid infrastructure rather than complaining that renewables are too expensive to connect to the grid. It must also provide affordable electricity that does not harm the health of the people and the planet.

At the same time, government must also recognise the potential for municipalities and citizens to play a role in decentralised renewable energy provision, rather than depending only upon the private sector and Eskom.

Eskom is in no position to run the nuclear programme in South Africa.

The utility’ credit rating has dropped to Ba1 with a negative outlook, according to Moody’ financial services, and with this poor credit rating any plans to borrow more money for nuclear could ensure that South Africa’ sovereign rating officially becomes junk status.

The CSIR recently revised projected costs for coal, nuclear and renewable energy, which clearly indicates that renewable energy is the cheapest choice. The time for rational choices based upon the latest available information is now.

* Steele is the senior climate and energy campaign manager for Greenpeace Africa, Hugo is an attorney and programme head of the pollution & climate change programme at the Centre for Environmental Rights. Peek is the director of groundWork and Doyle is the project co-ordinator for Earthlife Africa Johannesburg.

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

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