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South Africa: an example of how nuclear waste costs are passed on to later generations

Questions we should therefore all be asking of government, the Department of Energy, the nuclear regulator, Nersa, Nuclear Waste Disposal Institute, Necsa, Eskom and the South African nuclear sector are: 

  • Who should bear the cost of nuclear plant decommissioning and long-term storage and disposal of high-level nuclear waste – the polluter, the customer or the taxpayer? 
  • Where are the real asset-based funds set aside within Eskom and Necsa for future decommissioning and long-term storage and disposal of high-level nuclear waste? 
  • Does the “polluter pays” principle apply in practice, or will the customer and taxpayer end up paying twice through government bailouts? 

One can only guess who may end up bearing the real decommissioning, high-level waste storage, disposal and final repository costs in due course – perhaps not the polluter at all, but our children’s children as taxpayers in the next generation. 

South African taxpayers exposed to high-level nuclear waste disposal and decommissioning liabilities, Daily Maverick, By Chris Yelland• 21 February 2021  

Citizens and taxpayers in South Africa continue to labour under the misguided belief that Eskom and the Nuclear Energy Corporation of South Africa (Necsa) make real funding provisions monthly, over the operating life of their nuclear reactors, to cover the costs of decommissioning and disposal of high-level nuclear waste from their nuclear plants, in terms of the ‘polluter pays’ principle.

Page 69 of the 8th National Report prepared by the Department of Energy and the SA National Nuclear Regulator,  and presented to the International Atomic Energy Agency (IAEA) in August 2019 in terms of South Africa’s obligations  to the Convention on Nuclear Safety, states in respect of Eskom’s Koeberg nuclear power station:

“Financial provision for decommissioning (as well as spent fuel management) continues to be accumulated on a monthly basis since commercial operation of the installation began in 1984. The financial provision is reflected in the annual financial statements of Eskom. These financial statements are audited in accordance with South African national legislation.

“In terms of decommissioning financial plans, the amount of decommissioning and spent fuel provision made each month is determined by the present value of future estimated cash flows. These financial plans are reviewed regularly and adjusted annually, and informed by the South African inflation rate.”

However, the problem with these fine words to the IAEA is that they are misleading, perhaps deliberately so, and that the so-called provision is actually something of a “Potemkin village” to placate and impress the IAEA and the public that all is well and under control.

In fact, no real money, securities or investments of any kind have actually been set aside monthly, annually or at stage and in any fund during operation of South Africa’s nuclear facilities as provision for decommissioning, long-term storage and final disposal of high-level nuclear waste, and/or the construction and operation of a high-level nuclear waste repository.

The National Radioactive Waste Disposal Institute (NRWDI) has confirmed that since Necsa’s SAFARI-I research reactor was inaugurated in 1966, since Koeberg commenced operation in 1984, and since the National Radioactive Waste Disposal Institute Act No 53, 2008 was promulgated in early 2009, no money has been put into the proposed Radioactive Waste Disposal Fund that has long been envisaged for this purpose.

The National Radioactive Waste Disposal Institute is a South African state-owned entity reporting to the Department of Energy, responsible for nuclear waste management and disposal services in terms of its enabling legislation.

“The Radioactive Waste Management Fund falls within the ambit of the DMRE. The Fund has not yet been set up, and therefore no payments can be made to the Fund at this stage”, commented Alan Carolissen, the institute’s acting CEO.

Carolissen further advised that the minerals department is currently finalising the draft Radioactive Waste Disposal Fund Bill, which will be gazetted for public comments in due course. However, no timelines were given in this regard, and the matter has been dragging on for years.

In reality, Eskom explains, the so-called provision made for decommissioning and disposal of high-level nuclear waste from the Koeberg nuclear power station is simply an accounting book entry for future obligations estimated at R16.2-billion, expressed in 2020 rands, and reflected as a liability on Eskom’s heavily overindebted FY 2020/21 balance sheet, as opposed to any realisable assets held in a ring-fenced fund for this purpose.

Riedewaan Bakardien, the chief nuclear officer at Eskom, says that of the R16.2-billion liability shown on Eskom’s 2020/21 balance sheet, some R8-billion is Eskom’s estimated liability for Koeberg’s decommissioning, and disposal of low- and intermediate-level nuclear waste at the existing Vaalputs repository.

The balance of R8.2-billion is Eskom’s estimated liability for long-term storage of spent fuel on site, for a centralised interim storage facility, and for developing, constructing and operating a deep geological final repository for high-level spent fuel waste from Koeberg, and associated transport costs.

However, based on international benchmarks, it would appear that Eskom, as the operator, not surprisingly significantly underestimates its liabilities for decommissioning and disposal of high-level nuclear waste from its Koeberg nuclear power station………….

as indicated above, the problem is that Eskom and Necsa have no ring-fenced funds set aside for this purpose. Both companies are technically insolvent and not going concerns, and only continue operations through regular ongoing bailouts by taxpayers via the sole shareholder, the state.

Questions we should therefore all be asking of government, the Department of Energy, the nuclear regulator, Nersa, Nuclear Waste Disposal Institute, Necsa, Eskom and the South African nuclear sector are:

  • Who should bear the cost of nuclear plant decommissioning and long-term storage and disposal of high-level nuclear waste – the polluter, the customer or the taxpayer?
  • Where are the real asset-based funds set aside within Eskom and Necsa for future decommissioning and long-term storage and disposal of high-level nuclear waste?
  • Does the “polluter pays” principle apply in practice, or will the customer and taxpayer end up paying twice through government bailouts?

One can only guess who may end up bearing the real decommissioning, high-level waste storage, disposal and final repository costs in due course – perhaps not the polluter at all, but our children’s children as taxpayers in the next generation. DM

Chris Yelland is the managing director of EE Business Intelligence. https://www.dailymaverick.co.za/article/2021-02-21-south-african-taxpayers-exposed-to-high-level-nuclear-waste-disposal-and-decommissioning-liabilities/

February 22, 2021 - Posted by | South Africa, wastes

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