Introduction
Are you confused by all the noise surrounding Government’s plans for the building of new nuclear power stations?
These briefs set out the energy policy framework, the status of the new nuclear power project, responsibilities, what to expect over the coming months and what to look for in further developments. Some aspects are dealt with in detail, but that is needed to make sense of what has become quite a convoluted topic.
We have intentionally avoided a discussion on nuclear energy in principle. Instead, we focus on the most immediate practical issues which confront South Africa in this field.
A note on measuring energy
Electrical energy is measured in terms of watts. An incandescent light bulb may be rated at 100 watts (100 W). That refers to its capacity to use energy. The quantity of energy consumed is measured in watt hours (Wh). Thus if a 100 watt bulb burns for an hour, it uses 100 Wh. If it burns for ten hours, it uses 1 000 Wh.
The prefix kilo – applied to watts or watt hours means 1 000 units. So the light bulb burning for ten hours consumes 1 kilowatt hour (1 KWh).
The prefix mega- means a million units (MW or MWh), the prefix giga- means a billion units (GW and GWh) and the prefix tera- means a thousand billion units (thus TW or TWh).
Current status of new nuclear projects
The Department of Energy’s “Nuclear Energy Policy” document of June 2008, provides the basic framework for South Africa’s policy. Nuclear energy is one of the policy options for electricity generation and the policy document encourages a diversity of both supply sources and primary energy carriers.
The most recent detailed presentation by Government on the status of new nuclear power projects within this policy framework, was made to Parliament’s Portfolio Committee on Energy on 11 October 2016 by the Minister of Energy. During her address to the committee, the Minister stated that the next phase in the process is to establish key national positions and strategies and that she would “ensure that the process is above board, that the pace, scale and price of the programme is within the accessible range of our country. We will ensure that the process is not only transparent and above board but free of corruption”.
She further stated that the missing link in the programme so far has been communication and the participation of communities. This was the reason for the decision not to publish a Request for Proposal (RFP), which had been expected by October 2016. She stated that the updated Integrated Resource Plan (IRP) and Integrated Energy Plan (IEP) were supposed to be presented to the Cabinet committee on 12 October 2016, but that committee had requested a postponement. Once these documents have been approved by Cabinet, they would be provided to the public for consultation. In his Medium Term Budget Policy Statement to Parliament on 26 October 2016, the Minister of Finance confirmed that the Treasury will work with the Department of Public Enterprises and Eskom to ensure that the scale and phasing of the programme are in South Africa’s best interests and that the procurement arrangements are transparent and compliant with the law.
Procurement
The recent comments by the Minister of Energy regarding the need for public consultation and the fact that the whole process has been delayed to permit the finalisation of the IRP and to allow for consultation, stand in stark contrast to the actions of Government over the past few years. The latest stance by the Minister is also in complete conflict with the statement issued by the Department of Energy on 22 September 2014 that the Russian Federation and South Africa had signed an Intergovernmental Agreement on Strategic Partnership and Cooperation in Nuclear Energy and Industry. This agreement was signed by the Minister herself (Ms Tina Joemat-Pettersson) on behalf of the South African Government.
According to the press statement,
The Agreement lays the foundation for the large-scale nuclear power plants (NPP) procurement and development programme of South Africa based on the construction in South Africa of new nuclear power plants with Russian VVER reactors with total installed capacity of up to 9.6 GW (up to 8 NPP units). These will be the first NPPs based on the Russian technology to be built on the African continent. The signed Agreement, besides the actual joint construction of NPPs, provides for comprehensive collaboration in other areas of the nuclear power industry, including construction of a Russian-technology based multipurpose research reactor, assistance in the development of South-African nuclear infrastructure, education of South African nuclear specialists in Russian universities and other areas…
South Africa today, as never before, is interested in the massive development of nuclear power, which is an important driver for the national economy growth. I am sure that cooperation with Russia will allow us to implement our ambitious plans for the creation by 2030 of 9.6 GW of new nuclear capacities based on modern and safe technologies. This agreement opens up the door for South Africa to access Russian technologies, funding, infrastructure, and provides a proper and solid platform for future extensive collaboration.
The agreement with Russia was signed on 21 September 2014 but was only tabled in Parliament by the Minister on 10 June 2015. The comment may be added that whilst this agreement is brief, it is nevertheless clearly more detailed on specific projects (even detailing certain priority projects) than the agreements signed with other countries, which are typical framework agreements, without any specific project details. The text of the press statement quoted above also creates the impression of a done deal - subsequently denied by the Minister. If this is correct, an unanswered question remains: how can the agreement with Russia and the press statement be explained and why was such priority treatment apparently accorded to the Russians?
Subsequent to the signing of the agreement with Russia and as recently as 26 December 2015 the Department of Energy stated that Cabinet had on 9 December 2015 approved that the RFP for the Nuclear New Build Programme of 9.6 GW should be issued and that the process is to be guided by the 2010 – 2030 IRP, as published in 2011.
This background makes it quite clear that a lot of back-tracking has been done by the South African Government on this issue. There may be several reasons for this effective about-face. These would include the fact that the legal, technical and financial complexity of the whole project was underestimated, coupled with a belated realisation that fast-tracking the project runs the risk of falling foul of legislative and regulatory requirements, which could lead to a wave of negative publicity and an increasing danger of public interest litigation.
Litigation has already started in this sphere, in the case brought against the Minister of Energy by Earthlife Africa and the Southern African Faith Communities’ Environment Institute, in which the High Court has been approached to declare not only the agreement with Russia as being unlawful and unconstitutional, but also any action to procure a new nuclear capacity, as a result of a failure to exercise certain prescribed powers under the Electricity Regulation Act and the absence of a fair public participation process. This case is set down for hearing in the High Court on 13 and 14 December 2016.
A further reason for the more careful approach taken by the Minister is certainly the stance of the Treasury, which has consistently defended the view that the cost should be affordable for the Government’s finances. The fact that Eskom is now to procure and finance the new nuclear power plants does not necessarily put this outside of the Treasury’s reach - since Eskom is a state-owned enterprise and is therefore subject to the Public Finance Management Act.
Anton van Dalsen
Legal Counsellor
anton@hsf.org.za
