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Jim Green − Nuclear Monitor editor
Pro-nuclear commentator Dan Yurman warned in December 2014 that South Africa’s nuclear power program would be a bumpy ride: “Almost no one believes that as long as Zuma is in power that anything remotely resembling an orderly procurement process is likely to take place.”1
The most recent controversy was President Jacob Zuma’s dismissal of Finance Minister Nhlanhla Nene on December 9.2,3 And the sacking of his replacement four days later! No reason was provided to justify the decision to sack Nene, who said in August that he wouldn’t sign off on the Zuma-led plan for a 9.6 gigawatt nuclear power program if it was unaffordable, and wouldn’t be swayed by political meddling.4 No such constraints apply now that Nene has been sacked.
Journalist Ranjeni Munusamy said of the decision to sack Nene: “It was an illogical, irrational decision for which South Africa will pay dearly. For Zuma, it is another accomplishment in his mission to completely capture the state and will ensure unwavering loyalty from those who serve at his pleasure. There will be no defiance in cabinet ever again.”2
Mzukisi Qobo from the University of Johannesburg said:3
“The crux of Nene’s fall is not easy to decipher. But two factors seem to have driven the final nail into his professional coffin. The first has to do with his hard stance on the country’s state-owned airline, South African Airways. …
“Second, it is apparent that Zuma found the National Treasury, and Nene in particular, a stumbling block to a ; nuclear deal the President is believed to have promised the Russians. It is estimated that the deal could cost as much as R1 trillion [€57 billion; US$63 billion]. Nene’s allocation of a mere R200m [€11.4m; US$12.6m] towards research for this programme must have been seen as an insult by Zuma’s cronies and insiders. …
“At the heart of both the South African Airways saga and the nuclear deal is the failure by the country’s leadership to adhere to accountability and transparency mechanisms, especially the Public Finance Management Act, as well as to grasp the implications of irrational decision-making on the fiscus and the economy.”
Nene’s dismissal came days after international ratings agencies Fitch and Standard & Poor’s downgraded South Africa to one level above junk status, citing the slowing economy and rising debt.2 Reuters reported that the removal of Nene “sent the rand currency to record lows, sparked a sell-off in bank stocks and sent yields in both local and dollar-denominated debt soaring.”5
In February 2015, Zuma promised a “fair, transparent, and competitive procurement process to select a strategic partner or partners to undertake the nuclear build programme.” But he clearly favours Russia’s Rosatom − if only because of the possibility that Rosatom might provide much of the up-front capital − and has no interest in a “fair, transparent, and competitive procurement process”.
Research into the nuclear power plan carried out by the National Treasury has been kept secret − even the fact that the research was being carried out was kept secret.6 And nuclear costing studies by international consultants have been kept secret, and a request to access the reports under the Promotion of Access to Information Act was denied.7
Cost estimates for a 9.6 GW nuclear program range from US$37−100 billion (€34−91b) and there is profound scepticism that it can be financed, even with up-front support from Rosatom.8
In August, Energy Minister Tina Joemat-Pettersson disputed that plans for a 9.6 GW program were being developed − describing the 9.6 GW figure as “a thumb-suck”.9 In all likelihood that nuclear plans will be scaled back. An updated version of a government document − the Integrated Resource Plan − mentions a 4.86 GW nuclear program.
Whether a more modest program can be achieved is no sure bet. There is widespread opposition to the nuclear plan. And previous plans to build reactors came to nothing. In 2007, state energy utility Eskom approved a plan for 20 GW of new nuclear capacity. Areva’s EPR and Westinghouse’s AP1000 were short-listed and bids were submitted. But in 2008 Eskom announced that it would not proceed with either of the bids due to a lack of finance.
Bribery allegations
Anti-corruption NGO Sherpa has filed a case against Areva, alleging corruption related to a mining deal involving uranium assets in South Africa, Namibia and the Central African Republic.10
Uramin’s mining interests in the three countries were bought by Areva for a vastly inflated sum in 2007, according to Sherpa. The €1.8 billion paid had to be written off when the mines proved unfeasible.
Areva’s involvement in the tender process for the construction of nuclear power plants in South Africa has also been called into question by Sherpa. “Three or four months after the purchase [of Uramin], South Africa made a call for tenders for a nuclear power plant,” Sherpa’s executive director Laetitia Liebert said. “This conjunction of facts can lead us to suspect that Areva intended to influence high ranking officials.”
Areva’s offices and the homes of former executives were searched by France’s financial prosecutor last year.
Meanwhile, on the same day as Nhlanhla Nene’s sacking, South Africa’s Supreme Court of Appeal upheld an appeal from Westinghouse against Eskom’s 2014 award of a contract for replacement steam generators for the Koeberg nuclear plant to Areva.11 The Court ruled that Eskom had acted unlawfully in the way it reached its decision to award the tender to Areva, by taking into account considerations that lay outside the criteria for the tender. This, the court said, made the award of the tender unlawful and procedurally unfair. The two companies were told before that award of the contract that “strategic considerations” would be taken into account, but not what those considerations would be.
References:
1. Dan Yurman, 6 Dec 2014, ‘China jumps into the action in South Africa’, http://neutronbytes.com/2014/12/06/china-makes-haste-to-develop-its-nucl…
2. Ranjeni Munusamy, 10 Dec 2015, ‘Nene out because he angered Zuma over SAA and nuclear deal’, http://africajournalismtheworld.com/2015/12/10/south-africa-nene-out-bec…
3. Mzukisi Qobo, 11 Dec 2015, ‘Why Zuma’s actions point to shambolic management of South Africa’s economy’ http://theconversation.com/why-zumas-actions-point-to-shambolic-manageme…
4. Mike Cohen, 27 Aug 2015, ‘Opposition mounts to government’s nuclear plans’, Sunday Times, www.timeslive.co.za/sundaytimes/stnews/2015/08/27/Opposition-mounts-to-g…
5. Tiisetso Motsoeneng and Mfuneko Toyana / Reuters, 13 Dec 2015, ‘In U-turn, South Africa’s Zuma restores Gordhan to finance ministry’, www.reuters.com/article/us-safrica-gordhan-idUSKBN0TW0T320151213
6. David Maynier, 27 Sept 2015, ‘Treasury’s work on nuclear energy being kept secret’, www.politicsweb.co.za/politics/treasurys-work-on-nuclear-energy-being-ke…
7. Carol Paton, 18 Sept 2015, ‘Business Day denied nuclear cost reports’, www.bdlive.co.za/business/energy/2015/09/18/business-day-denied-nuclear-…
8. Mike Cohen, 6 July 2015, ‘Will Putin Pay for $100 Billion South Africa Nuclear Plan?’, www.bloomberg.com/news/articles/2015-07-05/will-putin-pay-for-100-billio…
9. Carol Paton, 15 Sept 2015, ‘Joemat-Pettersson fires point man on nuclear’, www.bdlive.co.za/business/energy/2015/09/15/joemat-pettersson-fires-poin…
10. Daniel Finnan, 9 Dec 2015, ‘French nuclear giant Areva accused of bribery in South Africa, Namibia, Central African Republic’, www.english.rfi.fr/africa/20151209-corruption-case-against-french-nuclea…
11. WNN, 10 Dec 2015, ‘South African court upholds Westinghouse appeal’, www.world-nuclear-news.org/C-South-African-court-upholds-Westinghouse-ap…
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