The shock of the 2012 Budget is the planned expenditure of R300 billion for a new 9 600 megawatt nuclear fleet. We didn’t hear about this in Finance Minister Pravin Gordhan’s speech in Parliament; instead it was buried deep in the 2012 Budget Review.
Somehow, we would have expected that the minister would have mentioned this figure at least once, as a passing nod to the millions of hard-working South Africans who will cough up this R300bn in taxes. Not exactly people first, eh, Minister Gordhan?
Sadly, obscuring nuclear costs is standard operating practice in the atomic sector, which lives off the public purse like a bloated tick.
The Estimates of National Expenditure 2012, which is 986 pages of detailed appropriations that the National Treasury asks Parliament to approve, shows how much we are already paying for nuclear energy, including a hidden welfare programme for nuclear scientists and consultants.
In financial year 2008/09, we spent R584.8 million of taxpayers’ money on nuclear energy and regulation.
In financial year 2014/15, this figure will climb to R653.7m, of which R582.3m will be transferred to the SA Nuclear Energy Corporation (Necsa). Before getting to the details of where this money goes in Necsa, it is worth looking at the allocation of the other R71.4m: R12.3 million to the International Atomic Energy Agency in membership fees, R34m to the National Nuclear Regulator, and R10.4m to the various employees in nuclear sub-programmes of the Department of Energy.
These sub-programmes are good work if you can get it. The average salary at Nuclear Non-proliferation and Radiation Security is R302 077. At the Nuclear Safety and Regulation sub-programme it is R434 072. A whopping R9.3m will be spent on consultants in 2014/15.
It gets worse. In the next three years the National Nuclear Regulator (NNR) will spend R68m (out of a total appropriation of R101.5m) on something called staff retention.
The last planned nuclear build in SA was the Pebble Bed Modular Reactor (PBMR), which was abandoned last year at a cost of R9.4bn. The staff at the PBMR were then incorporated into Necsa and the NNR and paid in the event that their services may be required at some future point (“staff retention”) instead of standing in unemployment insurance fund lines like the rest of us.
The thinking is that if we don’t create work for these nuclear scientists, they will leave our shores and find work in the nuclear weapons industry. In 2004, a collection of SA nuclear scientists were found working for the clandestine AQ Khan network that was spreading nuclear weapons to Libya and North Korea.
The average employee at the NNR went home with R795 222 in 2010. The acting CEO, Guy Clapisson, must have been happy with his R1.36m pay cheque.
The situation at Necsa shows how nuclear energy defies rational business principles.
Necsa’s research reactor at Pelindaba produces medical isotopes for sale on the open market. This is Necsa’s core business and it brought in R1.1bn in revenue last year.
Yet, Necsa’s expenses were R1.62bn, and the Treasury was required to make up the difference. Instead of being turfed out for running a loss-making enterprise and having to be bailed out by the state each year, the average employee at Necsa went home with R397 000. The 2010 CEO, Rob Adams, earned R2.664m, including a R619 000 bonus.
There is obviously a lot of money to be made in the nuclear industry, and this explains why SA is stumbling into a new nuclear programme. The above-mentioned largesse is based on one research reactor and one power reactor.
The current plan is to expand this to two research reactors and seven power reactors; if this goes ahead, the industry and its couple of thousand employees will be awash in cash.
Does SA even need nuclear reactors? Not according to the gazetted Integrated Resource Plan 2010, which maps out the electricity generation pathway for the next two decades.
When the plan was run through the Department of Energy’s computer modelling programme, the most cost-effective plan that also met our carbon emissions and security of supply requirements didn’t include nuclear. The department then reinserted nuclear power as a matter of policy; basically, because we have a policy on nuclear, we must have it.
In November, the National Planning Commission called for a rethink of nuclear power. Cosatu, faith-based groups and civil society are all opposed. The only people who seem to need new nuclear reactors are those within the industry itself.
The R300bn cited by the Treasury raises more questions than it answers. It is surely too little for the planned build, with the ultimate cost will being closer to the R1 trillion mark.
What the Treasury allocation doesn’t indicate is now how much Eskom will be required to finance through bonds, loans, and higher tariff prices. Nor does this figure include the financial risk of a nuclear accident; Fukushima is set to cost Japan $500bn (R3.7 trillion).
As a society, we have a problem with corruption; entire provinces have been looted. State expenditure of R300bn or more will be like blood in water for the sharks of tenders and kickbacks. The only way to avoid this is transparent public processes for any and all nuclear-related procurements.
Two weeks ago, Earthlife Africa Johannesburg asked the Treasury for a public process in analysing nuclear costs and purchases. We are still awaiting a response.
Anyway, all of this is premature as the environmental impact assessment for the first of the new nuclear plants is not even complete. This alone shows the level of respect the Department of Energy and the nuclear industry have for the environment. They have said we will have new nuclear plants, ignoring a raft of environmental legislation that requires prior approval of nuclear plants from the Department of Environment.
One can only wonder how the minister of water and environmental affairs is supposed to make a fair decision in a context where to disallow a new nuclear plant on environmental grounds would be political suicide; there is simply too much money on offer.