Russia Nuclear Deal: A mega Arms Deal in the making

25 September 2014

Note to editors: The following remarks were delivered by DA Leader Helen Zille during a press conference in Parliament today.

The Democratic Alliance today outlines our plans to fight the emerging Russia Nuclear Deal. In doing so, we also call on all South Africans to stand up against the potential for corruption on a grand scale, unfolding before our eyes.

This is a fight that must be taken on if we are to prevent future generations footing the estimated R1 trillion bill for a Deal ten times the size of the Arms Deal.

We have every reason to believe that the Deal is already effectively done, because President Jacob Zuma knows he is likely to bow out of office before the end of his term, and wishes to tie up the deal before then. 

Although identical statements were released both by the Russian nuclear vendor, Rosatom and the Energy Department of the SA government, the Energy Department later denied that this was a "Deal", but rather an "inter-governmental agreement on a strategic partnership in nuclear energy", which would also be signed with other potential vendors.

However, this attempt at post-rationalization does not explain why the joint Russian/SA statement said:  "The agreement lays the foundation for the large-scale nuclear power plants (NPP) procurement and development programme of South Africa based on the construction in RSA of new nuclear power plants with Russian VVER reactors with total installed capacity of up to 9,6 gigawatts (up to 8 NPP units).  These will be the first NPPs based on the Russian technology to be built on the African continent."

There are very serious questions that remain unanswered about this "Deal", concluded this week with Rosatom on the sidelines of the International Atomic Energy Agency meeting in Vienna.  These questions are severely aggravated by the secrecy surrounding the pact, and the refusal of South African officials to make its contents public.

The big questions on which President Zuma must account to South Africa are:

- Why is he so committed to nuclear energy expansion, contrary to the National Development Plan, which foresees renewable energy as a far more cost-effective option, even in the short term? 

- On what legal basis is the President by-passing normal due process for procurement? The President is not an energy expert and so, on what basis is he making this choice and pursuing it with such urgency?

- President Zuma has been to Russia on numerous occasions over the past 18 months.  What were the details of these visits? Why were they so secretive?  And why has Zuma clearly given preferential access to himself for the Russians, in the absence of witnesses or experts in nuclear energy?  What are the incentives attached? 

- What procedure did the Inter-Ministerial Committee on Energy Security, chaired by President Zuma, follow when it considered the feasibility of the proposed nuclear build programme?

- What is the mechanism through which it will be funded, and why is it shrouded in secrecy?

- What projections were made to justify this level of investment?

The fact is this deal cannot simply be done through a government to government agreement as this would make a mockery of our public procurement processes. All the signs point to the fact that a tacit deal (at the least) has been concluded without any of the proper processes (like standard, bi-lateral agreements).  We are now witnessing an attempt to rectify this in retrospect.

The SA Government has been at pains to claim that similar framework agreements will be signed with other countries, and that the Russia Nuclear Deal has, in fact, not been concluded.

But the Russians seem to be confident that the Deal is done and have gone public based on the real agreement that President Zuma negotiated while he was in Russia alone recently.  

Why else would the Energy Department and Rosatom have invented a press statement, confirming the deal, with both of them releasing the same statement word for word this week (before "recalling" it)?

Like the Arms Deal, the nuclear programme smacks of a fund-raising vehicle for the ANC and, by extension, President Zuma himself.  It is astounding that the government is pursuing this option so brazenly at a time when the court challenge around the withdrawal of corruption charges against President Zuma, relating in part to the Arms Deal, are coming to a head.

It is worth noting that in September 2013 the ANC sent over a delegation of their fund-raising initiative, the Progressive Business Forum, to Russia for the first time. 

At the same time a pact was signed between the ANC and President Vladimir Putin's United Russia Party, committing the two political parties to work together, despite the fact that the United Russia Party stands for values which run counter to South Africa's constitution. 

Shortly after this ANC visit, the then Energy Minister Ben Martins visited Russia and news of a draft agreement between our two countries started to surface for the first time. 

This draft agreement had a clause in it that would have given Russia the veto power over any other country wanting to do nuclear business with South Africa. This would have been in direct contravention of our public procurement processes. 

At the same time the Voice of Russia radio station was publicising the fact that Rosatom had been given the contract to build 8 new nuclear reactors in South Africa. This agreement was not however signed after the DA submitted questions regarding its status.

The fact is President Zuma's renewed enthusiasm for the Nuclear Deal, now shrouded in highly suspicious circumstances, runs counter to the obvious conclusion that the nuclear build programme will not in any way resolve South Africa's current energy crisis. 

Instead of tying our country into costly nuclear programmes with the Russians, which will take at least ten to twelve years to build, and will have no impact on the current crisis, we need an increased focus on increasingly cost-effective renewable technologies that will address the crisis immediately.

The Russia Nuclear Deal will not be able to be funded off either Eskom's balance sheet or South Africa's budget. 

Given that commercial banks are unlikely to take on the risk of funding nuclear energy, Rosatom's costs will have to be covered by South African electricity users. 

The experience of nuclear build programmes unfolding in countries such as the UK and Turkey (where Rosatom is also involved), should act as warning signs to South Africans that our current blended energy price of 60c/kwh will double, making it significantly more expensive than wind power, for example, at 74c/kwh.

This means that every single South African, their families, and their businesses have an interest in this Nuclear Deal being stopped. 

The DA has already written to the Energy Committee Chairperson requesting that Minister Tina Joemat-Pettersson be subpoenaed to appear before the committee and produce a copy of the full agreement as well as provide clarification on Rosatom's public statements. 

Today we also announce the submission of a PAIA application to the Presidency for all the documents relating to the decision to do business with Russia by the Inter-Ministerial Committee on Energy Security, which President Zuma chairs.

The DA will also submit questions on the circumstances around the sudden and unceremonious departure of former Minister Ben Martins and the Energy Department's Director General Nelisiwe Magubane, paving the way for Zuma loyalist Joemat-Pettersson to take over this portfolio.

The DA has reason to believe that both Martins and Magubane left as a result of heavy political pressure to ram through the nuclear deal with Russia.

The signs could not be clearer that this is a deal of politics and not economics, and South Africans will feel the sharp end of it on their pockets if we don't stop President Zuma in his tracks.

That is why a further question we will be asking on behalf of South Africans is what impact this deal will have on our electricity pricing path for households and businesses

We want full disclosure on not only the capital expenditure on nuclear power stations in the Russian Nuclear Deal, but also what it will cost to generate electricity from these plants, and to what extent electricity prices will skyrocket.

We will also continue to insist that Parliament has its first ever debate on the desirability or otherwise of a nuclear energy programme and its impact on the South African public.

If necessary the DA is prepared to go the legal route to challenge the lack of due process in the Russia Nuclear Deal, force government to account to parliament, and to obtain the records of government's decision that led to this deal.

South Africa has already been exposed to the hugely expensive conflict of interest in the ANC's Hitachi deal, to the detriment of our country's energy security. We must not allow any grand corruption of this sort to transpire again. 

The fact is the decision on the Nuclear Deal is a political one - not economic - and we must fight it to the very end.

Statement issued by DA leader, Helen Zille, September 25 2014

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