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FUNDAMENTAL FLAWS IN THE CASE FOR NUCLEAR IN SOUTH AFRICA

South Africa’s power utility wants to finance nuclear. This is a bad idea. , enca, Seán Mfundza Muller, Senior Lecturer in Economics, University of Johannesburg Sunday 6 November 2016 JOHANNESBURG – South Africa’s cabinet is to consider a proposal that a mooted nuclear power deal for the country be financed through the state-owned power utility Eskom. This is the latest twist in South Africa’s controversial efforts to expand its nuclear power capability by commissioning up to 9.6GW of energy from six nuclear power stations. The decision has been mired in controversy and still hangs in the balance and the offer by Eskom to foot the bill raises more questions than it provides answers.

Recent claims by Eskom’s management fail to adequately address any of the fundamental criticisms of the proposed nuclear programme.

Statements that Eskom can “finance nuclear on its own”, or absorb the risks from an incorrect decision, don’t add up economically or financially, and are misleading.

Furthermore, changes in Eskom’s rationale for justifying nuclear procurement over the last two years call into question the merits and motives of these arguments. Its claims about financing also raise serious questions about the arguments it presented to Parliament last year to justify a R23 billion cash injection and writing off a R60 billion loan.

The right decision would be for cabinet to defer further consideration of the programme for at least two years. In addition Eskom should account to Parliament on discrepancies in its statements about its financial situation.

THE FUNDAMENTAL FLAWS IN THE CASE FOR NUCLEAR

The three main problems with the case for nuclear procurement are well-established.

The actual power probably will not be needed. Recent trends in economic growth and electricity demand are much lower than the original forecasts on which the supposed need for nuclear power were based.

The programme is also likely to be very costly although there are still no credible, government cost estimates in the public domain. Many energy experts have argued that even if additional capacity was needed, other energy sources may be cheaper or more appropriate.

Finally, the combination of insufficient demand and costly supply means that nuclear poses a serious threat to the future stability of the country’s public finances and economic growth.

November 6, 2016 - Posted by | business and costs, politics, South Africa

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