Eskom’s R150 billion cash-reserves claim is wishful thinking – Natahsa Mazzone http://www.politicsweb.co.za/politics/eskoms-r150-billion-cashreserves-claim-is-wishful- Natasha Mazzone | 23 September 2016
DA says power utility’s profit of R4,6 billion a far cry from the R15 billion need a year to make up amount. The claim by Head of Generation for Eskom, Mr Matshela Koko, that Eskom could pay for the nuclear build programme by using cash-reserves, which he indicated could be R150 billion in 10 years’ time, is wishful thinking.
Eskom recorded a R4.6 billion profit in the 2015/16 financial year, a far cry from the R15 billion in profits it would need to generate consistently for the next 10 years to make up R150 billion.
Considering that by Eskom’s admission electricity demand is down, coupled with economic growth projected at a mere 0.6%, this raises serious questions about the assumptions underlying their projections.
I will therefore be submitting parliamentary questions to Eskom to find out how they intend to generate these massive cash reserves.
The validity of their projections notwithstanding, spending any cash reserves on a nuclear build program would be financially irresponsible. Eskom currently owes its creditors R322 billion underwritten by R350 billion in government guarantees. The entity should rather use excess cash reserves to decrease these liabilities.
Moreover, the fact that Eskom believe they can generate these massive profits whilst pushing for well-above inflation tariff increases on electricity, should be a slap in the face of the majority of poor citizens in our country. Energy and electricity costs are eating into their limited budget and now with these tariff increases, their pockets will be hurting even more.
The big question is why Eskom needs to be building nuclear in the first place when future electricity shortages would be better addressed by cheaper and more sustainable renewable and gas projects. With advancements in storage and battery technologies, these would be the better alternative by 2035.
The Minister is the only person with the prerogative to choose nuclear over any other form of energy, in this vein Mr Koko is overstepping his fiduciary duties to even suggest that Eskom would be investing in Nuclear.
In the context of its massive debt, and repeated requests for above inflation tariff increases, it is irrational to utilise any cash reserves in pursuit of the much maligned nuclear “wonder” programme and once again calls the motivation for the nuke deal into question.
Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 23 September 2016
Activists seek to bar plan by South African government to expand nuclear power http://af.reuters.com/article/southAfricaNews/idAFJ8N1BD01Z CAPE TOWN, Sept 22 (Reuters) – Activist groups are challenging a plan by South Africa’s government to expand the country’s nuclear power generation capacity on the grounds that the process was unconstitutional, they said on Thursday.
Earthlife Africa Johannesburg and the Southern African Faith Communities Environment Institute said in a statement that the High Court in Cape Town would hear their case on Dec. 13 and 14 this year to block plans to add 9.6 gigawatts of nuclear power. (Reporting by Wendell Roelf; Editing by James Macharia)
Minister will have to release all nuclear-bid information’, IOL News, 21 September 2016, Craig Dodds Cape Town – The chairman of Parliament’s energy oversight committee is to write to Energy Minister Tina Joemat-Pettersson to request all documents related to nuclear procurement by October 11, after she refused to release them on the basis that they were “sensitive”.
This comes after a legal opinion sought by another parliamentary committee confirmed that it had the right in terms of the National Assembly rules to “summon any person to produce any document it requires in carrying out its functions”………
In a written reply to a request from Mackay earlier this month, Joemat-Pettersson refused to provide a number of key documents related to nuclear procurement.
Majola said the National Assembly rules provided a mechanism for the committee to deal with confidential documents, which gave the chairperson of the committee, and not the minister, the authority to determine what should be kept from public view, and how.
“We will have to ask for the documents. We will go through legal advice to see which of the documents can be dealt with by the committee differently, not which of the documents will not be seen by the committee,” Majola said.
He committed to write to Joemat-Pettersson immediately, requesting that the department furnish the committee with all the documents.http://www.iol.co.za/dailynews/news/minister-will-have-to-release-all-nuclear-bid-information-2070774
DA DEMANDS ANSWERS OVER NUCLEAR CONTRACT http://ewn.co.za/2016/09/17/DA-demands-answers-over-nuclear-contract The party has called on the Energy Ministry to answer questions about an apparent nuclear contract. Gia Nicolaides | a day ago
JOHANNESBURG – The Democratic Alliance (DA) says the Energy Ministry needs to answer questions about an apparent nuclear contract that has left South Africans in the “dark”.
The Mail & Guardian is reporting that Shantan Reddy, the son of President Jacob Zuma’s friend Vivian Reddy, clinched a contract worth R171 million for the procurement of a nuclear build programme management system.
It’s been listed on the Energy Department‘s website under the “awarded bids” section, despite Deputy President Cyril Ramaphosa recently saying that a final decision to proceed with a nuclear build programme will only be made once there’s been a request for proposals.
The DA’s energy spokesperson Gordan Mackay says, “Since the president made the announcement in 2014 about the nuclear build programme, not a single document has surfaced in Parliament. We have submitted questions again three weeks ago, which she has declined on the basis that the information was sensitive.”
Empire Technology appears to have clinched the multi-million rand contract. (Edited by Shimoney Regter)
Energy department to co-operate with Treasury on nuclear deal, BUSINESS NEWS / 18 September 2016, Pretoria – The energy department will fully co-operate with National Treasury regarding the nuclear new build programme, Energy Minister Tina Joemat-Pettersson insisted on Saturday……………….
The awarding of the contract to Reddy’s company was highly irregular considering that both Joemat-Pettersson and Deputy President Cyril Ramaphosa had been at pains to assure South Africans that no deal had been concluded.
“If there is in fact no nuclear deal yet, why the need to procure a R171-million system to manage it?” Mackay asked.
Alarmingly, the contract with Reddy was awarded on the back of an as yet unidentified tender in the Free State and not publically advertised on the department’s website, as was standard practice. That notwithstanding, the deal with Reddy was personally signed off by the department’s director general.
“This raises serious questions surrounding the tender process that was followed, not least of which is what knowledge the minister had of the deal with Reddy.”
The DA would submit parliamentary questions to Joemat-Pettersson to ascertain, among other things, the reasons for the deviation from the department’s standard procurement process and the basis on which Reddy’s company, an entity with no experience in the nuclear field, was awarded the contract.
Also, whether the minister had any involvement in, or knowledge of the contract and why a contract for the management of the new build programme had been awarded if, by the minster’s account, no deal had been concluded.
“The move is premature at best and once again suggests that protestations by government are a smokescreen to hide the fact that the nuclear new build is a done deal. Moreover, the development ads to the growing body of evidence suggesting that the primary motivation being Zuma’s pursuit of the ill-advised and unaffordable nuclear deal is to enrich his cronies and fund his patronage network.
“The DA has long maintained that the nuclear deal has potential for corruption the likes of which South Africa has never seen. One thing is increasingly clear – the only really beneficiary of the nuclear deal will be Zuma Inc at the expense of an already highly indebted and fragile South African economy,” Mackay said.
African News Agency (ANA) http://www.iol.co.za/business/news/energy-department-to-co-operate-with-treasury-on-nuclear-deal-2069549
Watch: How South Africa’s nuclear plans will destroy the economy http://businesstech.co.za/news/energy/136935/watch-how-south-africas-nuclear-plans-will-destroy-the-economy/ By Staff Writer September 16, 2016
According to Outa, it is estimated that South Africa will have to borrow as much as R1.2 trillion to fund the plans, which would cripple the economy with R100 billion a year repayments needed.
The debt would be added to the over R1.89 trillion in debt the country already has, pushing the total to R3 trillion – a ‘nuclear bombing’ of the economy.
Outa argued further, saying that the nuclear build is unnecessary (echoing sentiments from energy expert Chris Yelland), with various renewable energy projects set to contribute more than enough power to the grid to meet needs over the next 15 years.
South Africa’s ‘s Nuclear Bomb – Why Government’s #Nuclear Deal Will Destroy SA
Nuclear power call is based on outdated plans, warns Yelland, BD Live South Africa
BY CHARLOTTE MATHEWS, 16 SEPTEMBER 2016, SA DID not need to commission huge new inflexible nuclear power capacity because the government’s chaotic planning meant there was a big chance the country would have a surplus of electricity in the next few years, Chris Yelland, the MD of EE Publishers, said on Thursday.
“SA does not have an energy crisis, it has a management crisis,” he said.
Yelland was speaking at the launch of Powermode’s monitoring portal, shortly after Energy Minister Tina Joemat-Pettersson said a request for proposals for 9,600MW of nuclear power would be issued on September 30.
Yelland said government figures released in Parliament this week showed electricity demand since 2011 had trended significantly lower than in the low-growth scenario in the outdated 2010 Integrated Resource Plan, and its 2013 update. Flagging demand reflected slow global growth in recent years and an economy moving towards lower energy intensity.
“Government cannot forecast correctly for five years, let alone 50. If SA moves to nuclear newbuild, it is committing to one vendor for 9,600MW, based on 2010 estimates, which are clearly wrong.”………..
Members of the Energy Intensive Users Group, SA’s biggest power consumers, were installing more solar power to reduce their reliance on Eskom.
As Eskom’s market share was shrinking, its unit costs were rising, requiring ever-higher tariffs, which in turn forced more customers to become self-sufficient. Yelland said Eskom’s next application to recover costs was likely to be for a R22bn clawback, double what it was allowed in 2016.
In the past decade, Eskom’s tariffs have risen fourfold in nominal terms and were now increasing at double its historical average, adjusted for inflation.
Yelland said SA had to move away from centralised planning to a market-driven model for power-generation and create more distributed generation rather than generating most of its power on the Highveld. It needed a greater mix of different sources, not a large amount of new nuclear power. All this would provide the flexibility to meet changing demand patterns.http://www.bdlive.co.za/business/energy/2016/09/16/nuclear-power-call-is-based-on-outdated-plans-warns-yelland
Zuma pals clinch first nuclear deal, Mail and Guardian, Jessica Bezuidenhout 16 Sep 2016 Shantan Reddy, the son of President Jacob Zuma’s friend Vivian Reddy, has clinched what appears to be a landmark deal for the country’s controversial multibillion-rand nuclear programme.
Details of the R171-million contract for “the procurement of the nuclear build programme management system” emerged after an innocuous-looking entry appeared on the department of energy’s website.
Listed under the category “awarded bids”, it is scant on detail, simply naming the winning bidder of BAC-10/2016 as Central Lake Trading 149, a company trading as Empire Technology.
The little-known company’s sole director is Shantan Reddy, the son of flamboyant power and property mogul Vivian Reddy, a longtime friend of the president.
Although there is no suggestion of wrongdoing on the part of Reddy or his company, the awarding of this contract has set off alarm bells with industry experts and politicians because the government continues to maintain that it has not entered into any nuclear deal.
The contract awarded to Reddy’s company, if indeed linked to the “nuclear build”, as stated by the energy department, suggests that work may have already begun behind the scenes.
“Considering that the minister of energy is on record stating no deal has been signed and the deputy president [has said] that South Africa will not commence on nuclear if it can’t afford it, the issuance of a contract is highly irregular,” said Gordon Mackay, the Democratic Alliance’s spokesperson on energy.
The Mail & Guardian briefly spoke to Shantan Reddy about the energy department deal. He asked for questions to be sent on SMS but did not respond by deadline….. (subscribers only) http://mg.co.za/article/2016-09-16-00-zuma-pals-clinch-first-nuclear-deal
‘Predatory elite’ eye nuclear deal http://mg.co.za/article/2016-09-16-00-editorial-predatory-elite-eye-nuclear-deal The looming nuclear deal that seems to be President Jacob Zuma’s biggest pet project (and will be South Africa’s biggest financial and construction deal ever, if it happens) has been questioned by many commentators, including MPs and civil society groups. The deal, which already has links with Russia’s notoriously oligarchic government, worries anyone who can see in it the largest opportunity yet for the looting of state resources by the group currently devoting all their means to that end.
The nation was told, in the National Assembly, that all the necessary checks would be put in place and that the legal and other hurdles would be diligently cleared before the deal went ahead. The intimation was that any serious obstacles to the deal would come to light and could possibly scupper it entirely – a prospect many would welcome.
But the nation was also told, by a different minister in the other House of Parliament, that it was full steam ahead on the project – with the intimation that no objections would be allowed to stand in its way.
The first utterance came from Deputy President Cyril Ramaphosa, who seems to have been given the job of placating the objectors and the intelligentsia, or anyone concerned about the ongoing plans of what unionist Zwelinzima Vavi long ago called “the predatory elite”.
The second utterance came from Zuma’s extremely loyal energy minster, Tina Joemat-Pettersson, so it was to be expected that she would show every sign of wanting to do his bidding as soon as possible.
It has emerged that a contract worth R171-million for a “programme management system” to help get the nuclear deal off the ground has been awarded, in practical secrecy, to a company called Empire Technology. This is wholly owned by Shantan Reddy, the son of controversial businessperson Vivian Reddy, who has given Zuma considerable financial support over the years, including a contribution to the building of the president’s family complex in Nkandla.
That so little is known about the company, and that the deal appears to have gone through so quickly, is cause for concern.
Is the nuclear deal going ahead or not? Will South Africa be taking adequate precautions to ensure that it doesn’t overly indebt the nation? Was the evidence collated and presented to Zuma’s Cabinet? There are no clear answers to any of these questions.
Without a rational and sensible evaluation of the logic of the deal, and an accounting of the costs and benefits to South Africa if it goes ahead, it can’t be seen as much more than another way for the predatory elite to milk money from the state.
Zupta’s nuclear deal: either we end it or it ends us, Politics Web, 16 Sept 16, Jacob Zuma’s nuclear deal will be disastrous for South Africa. It will literally bankrupt us, diverting billions of rands from poverty reduction projects, while producing a nuclear white elephant in two decades’ time. But it will make a lot of money for Zuma, the Guptas and ANC cronies in the short-term and they will be long gone by the time we feel the real pain.
In Parliament last week, Energy Minister Tina Joemat-Pettersson confirmed that government is going ahead with the nuclear procurement process and Public Enterprises Minister Lynne Brown confirmed that information on the process will not be made public. In other words: “We’re going to tie you into far more debt that you can ever repay, but this is none of your business.”
This morning, a DA-assisted Mail and Guardian investigation has revealed the first concrete signs of corruption associated with the nuclear deal. A R171 million contract for the “Nuclear New Build Programme Management System” has been issued, potentially irregularly, to the son of Vivian Reddy, a close friend and ally of President Jacob Zuma.
South Africans should be deeply concerned about the government’s nuclear project. Let’s be clear. It is in no way motivated by a genuine desire to secure South Africa’s energy future in the most cost effective and sustainable way. Rather, this huge project is going ahead because Zuma, the Guptas and other ANC elites stand to make millions in bribes and tenders.
Like the Arms Deal, Nkandla and the President’s new jet, there is no intention to use state resources judiciously in order to derive the maximum public benefit. And like these ill-conceived projects, the nuclear deal will have the ultimate effect of stealing from all of us, but particularly the poor, in order to enrich a small group of connected ANC cadres……….
In forging ahead with this ill-conceived plan, our hapless government is locking SA into an over-priced, outdated technology within Eskom’s monopoly, while blocking the development of renewables which are dynamic, increasingly cost-effective and more job-creating. It is no coincidence that Eskom is refusing to sign any new contracts with independent power producers…………http://www.politicsweb.co.za/opinion/zuptas-nuclear-deal-either-we-end-it-or-it-ends-us
MPs told nuclear power could cost triple the estimate http://www.timeslive.co.za/thetimes/2016/09/08/MPs-told-nuclear-power-could-cost-triple-the-estimate JAN-JAN JOUBERT | 08 September, 2016
Parliament was warned yesterday that the final bill for nuclear power procurement could be three times higher than projected because of unpredictable cost escalations and the expense of decommissioning nuclear power plants.
The parliamentary budget office briefed MPs yesterday morning on the cost and other considerations of the country’s electricity generation options.
The office’s research on the costs incurred by more than 400 projects worldwide found that nuclear power generation costs exceeded the original estimates by an average of 117%, compared with 70% for hydroelectric power, 13% for thermal, including coal, 8% for wind power and 1% for solar power.
The office agreed with DA MP Gordon Mackay when he said that decommissioning added 100% to nuclear power costs. The office said the outlay for nuclear power was 67% higher than for gas and 16% more than for coal.
Mackay took the budget office to task for a lack of clarity on:
- The actual cost of the projected nuclear building programme, estimated at R600-million to R1.7-billion;
- Infrastructure construction costs not factored into projections for gas as an energy resource;
- No reference being made by the budget office to the energy preferences listed in the National Development Plan, which supposedly guided government policy;
- The budget office had not reached any conclusion on the costs to consumers of the energy options;
- The effect of each option on the country’s economic growth was not adequately estimated;
- The huge decline in South African energy demand was not sufficiently explained; and
- The decommissioning of the coal-fired power stations was not factored in.
Budget office head Mohammed Jahed said that Mackay’s objections fell outside the mandate given to his office by parliament’s appropriations committee but could be dealt with at a follow-up meeting.
South Africa: No Nuclear Deal Entered Into – Deputy President . All Afric a, 8 Sep 16 Cape Town — Deputy President Cyril Ramaphosa says no nuclear deal has been entered into with any country. The Deputy President said this when responding to oral questions at the National Council of Provinces (NCOP) on Wednesday.
A Member of Parliament had asked, among other questions, whether government has entered into a nuclear deal with any country.
“Government has not entered into a nuclear deal with any country,” the Deputy President said.
The Deputy President said government remains committed to an open, fair and transparent procurement process.
Government wants to implement the programme at a scale and pace that the country can afford.
“A request for proposals for a nuclear new build programme of 9,600 MW will be released to the market during this financial year in line with the Cabinet decision taken on 9 December 2015.
“The Department of Energy is currently consulting with relevant stakeholders to finalise the documentation,” he said…….http://allafrica.com/stories/201609081107.html
Government quibbles over true cost of nuclear – but it’s going to be very expensive http://mg.co.za/article/2016-09-08-government-quibbles-over-true-cost-of-nuclear-but-its-going-to-be-very-expensive Phillip de Wet 08 Sep 2016 Any decision to proceed further with the nuclear build programme will only take place after the request for proposal process has been completed,” Deputy President Cyril Ramaphosa told the National Council of Provinces (NCOP) in Parliament during a question session on Wednesday afternoon.
Almost simultaneously, Energy Minister Tina Joemat-Pettersson told Parliament’s other house, the National Assembly: “As far as I’m concerned, a request for proposal will be issued on September 30 for the procurement process in which we have Cabinet approval to test the market on the procurement of nuclear.”
Both insisted that there is, as yet, no firm commitment to buy a fleet of nuclear power stations, which it is estimated will cost more than R1-trillion, despite long-standing signals of an obstinate political will to do so.
“Within the range of conventional technologies considered, nuclear energy is the most expensive,” the parliamentary budget office said in a report it delivered to Parliament’s standing committee on appropriations, also on Wednesday.
Its 23-page report, Electricity Generation Technology Choice: Costs and Considerations, the office said “present the key factors that need to be considered by Members of Parliament concerned with public finances in considering technology choice”. The standing committee had requested the report.
Throughout its study, the office steered scrupulously clear of recommending or denigrating any type of electricity generation. Selection of technology is complicated, it explained, and needs to take into account everything from the carbon footprint to local industrialisation.
But nuclear fares very poorly, indeed, in the office’s analysis.
Nuclear is 16% more expensive than the most expensive type of coal electricity production, the office said, drawing on figures more current than any the department of energy has released and 67% more expensive than the most costly way of using natural gas to generate power.
Eskom, which was once excluded from the nuclear preparations, has recently claimed in a series of statements by its CEO, Brian Molefe, that nuclear generation is the cheapest way for South Africa to build additional base-load capacity.
The plans that supposedly underpin the plans to build new nuclear power stations are wildly out of date, the parliamentary budget office said. The official integrated resource plan (IRP) dates from 2010 and its 2013 update does not yet have official status — because, some have speculated, it provided an insufficiently rosy picture to justify a nuclear build.
“Using an out-of-date IRP will result in a sub-optimal mix of generation plants and higher electricity prices,” the office said, with graphs showing how electricity demand declined as prices soared and the economy stalled. Even the most pessimistic integrated resource plan projection had forecast fast-growing demand.
Overbuilding generation capacity based on mistaken assumptions can be costly, the office warned gently. And past experience shows that nuclear and hydropower projects are most prone to high cost overruns and delays — and are almost impossible to adjust once ground is broken.
“It may be prudent in situations of high uncertainty to avoid very large capital investments where the repayments of loans are certain but returns from the project are uncertain and possibly volatile,” it said.
“In pursuance of a suitable energy mix, government is determined that our investment in generation capacity should be evidence-based,” Ramaphosa told the NCOP.
“astonishing and reckless” – South Africa’s Energy Minister’s statement on nuclear deal to commence soon
News that nuclear deal will start by end-September is ‘reckless’, DA says http://www.bdlive.co.za/business/energy/2016/09/08/news-that-nuclear-deal-will-start-by-end-september-is-reckless-da-says BY LINDA ENSOR, ENERGY Minister Tina Joemat-Pettersson’s shock announcement that the first phase of the nuclear deal is to commence by the end of September was both “astonishing and reckless,” DA energy spokesperson Gordon Mackay said on Thursday.
The minister announced in the National Assembly on Wednesday that a request for proposals for the nuclear build programme would be issued on September 30. The government has decided to build nuclear plants that will generated 9,600MW.
“Not only is the proposed nuclear deal the subject of litigation in the Western Cape High Court, but the announcement will add yet further fuel to the fire that will see SA’s international credit rating go up in smoke,” Mackay said.
“Critically, the minister’s decision to commence with the first phase of the nuclear new build programme, despite the fact that not a single document with regard to the deal has ever been presented to Parliament, is a blatant abuse of power.”
Mackay said Joemat-Pettersson’s announcement came before October’s tabling of the medium-term budget statement by Finance Minister Pravin Gordhan, and represented a “blatant attempt to bully the Treasury into to coughing up the trillions of rand required to fund this unaffordable pet project of President Jacob Zuma”.
He said the DA would demand that all documentation relating to the nuclear deal be made available to Parliament’s energy committee and tabled in the National Assembly.
The DA was in possession of a parliamentary legal adviser opinion, which requires ministers to provide all necessary documentation to portfolio committees, irrespective of their so-called sensitivity.
South Africa’s Energy Minister Tina Joemat-Pettersson maintains the secrecy on nuclear power procurement plans
Tina Joemat-Pettersson refuses to provide papers on nuclear plans, BD Live, BY LINDA ENSOR, 06 SEPTEMBER 2016, ENERGY Minister Tina Joemat-Pettersson has refused to supply the DA with a range of documents related to the government’s nuclear power procurement plans, saying they are privileged, sensitive state documents the release of which “could compromise the new build process”.
Another ground for her refusal is that the requested documents are also subject to the sub judice rule as there is litigation in the High Court in Cape Town in a case brought in October last year by Earthlife Africa and the Southern African Faith Communities’ Environment Institute against the minister and President Jacob Zuma.
The two organisations which are attempting to stop what they say is a flawed and illegal, nontransparent nuclear procurement process, have requested the same information from the government.
The minister’s refusal was contained in a written reply to a parliamentary question by DA energy spokesman Gordon Mackay, who asked for copies of the proposal for the roll-out of new nuclear power plants as signed off by her; the Integrated Nuclear Infrastructure Review by the International Atomic Energy Agency; the terms of reference for the National Nuclear Energy executive co-ordinating committee, its communication and stakeholder engagement strategy and its phased decision-making approach to implementing government’s nuclear programme; and the designation of Eskom as the owner and operator of nuclear power plants in SA……..http://www.bdlive.co.za/business/energy/2016/09/06/tina-joemat-pettersson-refuses-to-provide-papers-on-nuclear-plans
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