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Not just Russian but ANY nuclear new-build is a poor choice for South Africa

South Africa’s Electricity Choice, Part 4: The dangers of dealing with Russia, Daily Maverick, ANTON EBERHARD & AMORY LOVINS, SOUTH AFRICA, 19 FEB 2018 

Read parts 1, 2 and 3 of this series here, here and here

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Courts may have struck down the nuclear agreement between South Africa and Russia but ministers in the Zuma government have indicated they are not done discussing nuclear power and Russian involvement. This is of major concern to many – not only because of a possible compromise in SA’s national sovereignty and independence but also due to the ulterior motives Russia might have due to its economic troubles and the dubious need to build nuclear power plants despite lacking the capital to finance it.

Procurement and financial risks

South African officials have made a wide range of statements in the past few years about whether the government intends a “fair, transparent and competitive procurement process”, or a process with that form but not its substance (as vendors may expect), or an opaque direct negotiation between the South African government and another government, most likely that of the Russian Federation. During a series of private presidential meetingsover the past seven years, these two countries concluded an unusually strong and specific nuclear agreement. It gave Russia a veto over South Africa’s nuclear co-operation with any other country, enabled Russia to withhold any data it wishes from public scrutiny, exempted Russia from any accident liability and promised Russia favourable tax and financial treatment. While denying favouritism, South Africa did not appear to have offered similar terms to any other potential partner. Though the April 2017 decision of the Western Cape High Court set aside this agreement, officials have continued to imply that a nuclear deal with the Russians is likely……..

 is Russia a credible and reliable financial partner? Its National Wealth Fund, estimated at $72-billion, is under pressure; by early 2015 it was already overextended by $24-billion pledged to finance nuclear exports to four countries. (Those included the Hungarian Paks nuclear deal, whose low-interest loan commitment helped crash Russia’s foreign-trade bank needing an $18-billion bailout.) About another $64-billion would be needed to fulfil other offers already extended. And even that couldn’t go far if more than a handful of deals were like the proposed Bangladeshi Rooppur plant mentioned above – 90% financed ($12-billion) at 2.55 percent annual interest with a 10-year grace period, then an 18-year repayment.

Rosatom, the self-regulated state nuclear enterprise, is led by a former prime minister reporting to President Vladimir Putin and exempted from all normal state controls. Independent experts agree that Rosatom (or any other state entity) would be lucky to build half the 30 additional nuclear projects it’s trying to sell for $300-billion to a dozen more countries including South Africa. Russia’s interest rate in early 2016 was twice (and in an earlier spike, over three times) what any coal-competitive nuclear project would require. The Russian state’s capacity to absorb the spread is quickly vanishing. Russia’s domestic reactor starts halved in 2015; all state nuclear subsidies are to halt in 2016. Yet without those subsidies, “Rosatom wouldn’t complete a single project anywhere”.

Russia needs huge amounts of outside capital to finance its nuclear commitments. …….

Not just Russian but any nuclear new-build is a poor choice for South Africa. It cannot compete with efficiency and renewables, by every relevant measure: cost, timeliness, financing, jobs, economic development, environmental and safety risk, independence, security, abundance of eternally free local energy sources, and the social good of “energy democracy”. These goals support and are advanced by the agenda of “an electricity sector that will deliver, transparently, competitively, reliably and sustainably, the electric services that will power economic growth and improve the welfare of all our people”.

It has come to this: ever more sales-starved nuclear vendors, seeking ever less solvent customers, now offer a risky project the seller can’t finance to a customer who can’t pay – a customer with no need, enchanted by the same nuclear devotees whose broken promises already cost the nation dearly, and with no apparent accountability.

South Africans deserve, and politics or markets will ultimately deliver, reliable and affordable electrical services – enough, for all, for ever. At issue is how much money, time and opportunity for national advancement will be lost before South Africa finally abandons the folly of procuring new nuclear power plants.    https://www.dailymaverick.co.za/article/2018-02-19-south-africas-electricity-choice-part-4-the-dangers-of-dealing-with-russia/#.WoyRylpubGg

 

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February 21, 2018 - Posted by | politics, Russia, South Africa

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