nuclear-news

Secrecy in South Africa, as government mulls subsidies for nuclear power

Regardless of how the financing will be structured it is clear that most of the money will come from debt, which South Africans will ultimately pay for through higher electricity tariffs or increased taxes. The details of these financing structures are also unlikely to be transparent.

SA still in the dark over nuke money, Mail and Guardian, South Africa 02 AUG 2013  NEWS ANALYSIS LYNLEY DONNELLY Vendor financing is a possibility, but questions remain over the country’s finances. The government appears intent on hitching its star to a big nuclear wagon, despite serious misgivings within its own ranks over whether the need for nuclear power is as urgent as once believed, the possibility of emerging alternatives and the continued opposition from business and civil society.

Chief among the reasons for a rethink of South Africa’s nuclear ambitions is the ability to pay for it, according to energy experts and economists, although there are international financing models.

The state has so far refused to pronounce on the cost, but it is estimated that it will be between R400-billion and R1-trillion.

The integrated resource plan of 2010 (IRP2010) that governs electricity policy prescribes a nuclear build of 9 600 megawatts or six power stations.

The cost will depend on whether the government will propose different, and potentially smaller, provisions for nuclear power when it releases an anticipated revision of the policy later this year.

Although Eskom has been named the owner and operator of any future nuclear power stations, the utility has no way to pay for them without steep electricity tariff hikes, an extremely unpopular prospect.

Talk to back contracts and debt
Anton Eberhard, a professor at the University of Cape Town’s graduate school of business, said the government could also not fund it directly through the treasury.

He said there might be talk of further guarantees to back contracts and debt but, given the scale of the proposed nuclear investment and the existing and growing guarantees backing other programmes, “the space for taking on further contingent liabilities is constrained”………….

“This is the ultimate hurdle that a nuclear programme will face. “Can they demonstrate transparently that the contracted price from a new nuclear power plant will be cheaper than alternatives?”

The government policy poses further complications, particularly its aims to drive localisation on the nuclear programme……….at the upper cost estimates of R1-trillion, the proposed nuclear programme could double the government’s debt levels overnight to an estimated 80% of gross domestic product, Roodt said. That raises questions about whether the current plans are viable.

Tristan Taylor of Earthlife Africa, a vocal critic of nuclear power, said the country cannot afford the proposed nuclear programme, particularly in the light of other energy infrastructure commitments.

Regardless of how the financing will be structured it is clear that most of the money will come from debt, which South Africans will ultimately pay for through higher electricity tariffs or increased taxes. The details of these financing structures are also unlikely to be transparent.

Given the funding constraints and the other challenges, he said, it is unlikely that the government could make any commitments on nuclear power “any time soon”.

The department of energy did not respond to requests for comment. http://mg.co.za/article/2013-08-02-00-sa-still-in-the-dark-over-nuke-money

August 3, 2013 - Posted by Christina Macpherson | politics, South Africa