DoE R1 trillion nuclear programme likely to be funded with electricity tariff hikes
2 June 2015
Today the Department of Energy (DoE) and the South African Nuclear Energy Corporation (NECSA) appeared before the Portfolio Committee on Energy to brief it on the Nuclear Build Programme.
From today’s briefing it is clear that government has brazenly chosen to pursue the nuclear build despite it being fraught with financial and infrastructural limitations.
Of great concern are the cagey and evasive responses provided by the Department on the proposed financing models for what will be SA’s most expensive public procurement process ever.
Only a single slide in the presentation provides the public with information on the funding.
In the slide it is suggested that the DoE, through Eskom, intends to finance this programme by way of “tariff recovery at early stages” – also known as the Medupi/Kusile model where the consumer carries the cost of the new build through tariff increases.
From this information, one can only conclude that the DoE intends to fund the nuclear programme through massive electricity price hikes.
This will inflate the cost of running a business, cause widespread job losses, and make electricity unaffordable for many South Africans.
At an estimated cost of R1 trillion before cost over runs (almost 70% of new nuclear build projects are behind schedule), the choice to go nuclear is nothing short of absurd.
It cannot be fair that the taxpayer will end up paying for a programme which may very well cost in excess of the R1 trillion.
The DA will therefore call for a debate of national importance in Parliament on the severe consequences of the nuclear build programme for all South Africans.
Today’s briefing follows Energy Minister Tina Joemat– Pettersson’s announcement, in her budget speech a week ago, that her Department will begin with the nuclear procurement process in the second quarter of this financial year. The Minister expects to present the outcome of the procurement process to Cabinet by year end.
Considering South Africa is not close to being ready to roll out nuclear to the public, Minister Joemat-Pettersson’s apparent insistence and haste is alarming and, frankly, irresponsible.
The DA is primarily concerned with the impact of the proposed Nuclear Build Programme on SA’s potential economic growth as well the impact on the long-term electricity pricing path. We want clear answers as to the potential impact on input costs across the economy and an assessment of the impact on jobs.
We want clarity on the impact on electricity prices – will the poor for example be effectively priced out of legal electrical usage?
Will higher prices mean the proliferation of illegal connections – already sitting at about 8% nationally? Will higher prices encourage the non-payment culture that is increasingly prevalent in protest to poor electricity governance?
The DA is on record as stating that the pursuit of the NBP at this juncture is premature, dangerous and reckless. This is not, as some have contended, that the DA is anti-nuclear.
The DA’s concerns regarding the acquisition of nuclear are primarily driven by issues that affect real South Africans on the ground, many of whom are poor and struggling under existing economic and electricity woes.
Statement issued by Gordon Mackay MP, DA Shadow Minister of Energy, June 2 2015
