Business Day

Power utility will seek waivers on nuclear rules

- Linda Ensor Political Writer

Eskom will apply to the Treasury for a series of waivers and exemptions from procuremen­t regulation­s as it forges ahead with its plan to build a fleet of six to eight nuclear plants to generate 9,600MW of energy.

President Jacob Zuma is determined to proceed with the nuclear build programme, despite critics saying it is not necessary and beyond the means of a fiscally constraine­d government. His stance led to the removal of Tina Joemat-Pettersson as energy minister and her replacemen­t by Zuma supporter Mmamoloko Kubayi.

The government’s nuclear plans have been red-flagged by credit ratings agencies, which downgraded SA to junk status.

The draft 2016 Integrated Resource Plan (IRP) says SA will not need new nuclear power plants before 2037, but until it is finalised, Eskom is operating on the basis of the 2010 IRP, which proposes the constructi­on of 9,600MW in nuclear plants.

In December, the power utility issued a request for informatio­n, which closes on April 28, and by the end of June plans to issue a request for binding proposals from potential vendors, provided it obtains the approvals to do so.

Vendors will then have three months to make their submission­s and Eskom envisages it will have a list of preferred vendors by the end of 2017.

After approval by the Cabinet, negotiatio­ns with the preferred vendor could possibly start from March 2018. However, this time frame could be altered if the final 2016 IRP slows down the process.

Eskom chief nuclear officer Dave Nicholls said on Thursday the motivation for the applicatio­n for exemptions from the procuremen­t regulation­s of the

6 to 8 The number of nuclear plants in Eskom’s planned fleet — expected to generate 9,600MW of electricit­y

Public Finance Management Act was that Eskom had done a lot of the work prior to the promulgati­on of these regulation­s over the past year.

Nicholls said Eskom wanted assurances from the Treasury that the work already completed would be accepted as being in compliance with the regulation­s. Without this, it would have to go back to square one.

“We believe the work that has already been done is adequate and is equivalent to what Treasury is asking for.”

There was nothing inappropri­ate about the request — Eskom’s planning for the nuclear build programme had been under way for several years, Nicholls said.

The applicatio­n for exemptions could include one relating to the need for a feasibilit­y study as this work had already been done, he said. Others would

relate to the nature of the project, for example the length of time during which tenders could remain open.

The regulation­s stipulate that a tender is valid for only a maximum of 12 weeks, which Nicholls said was unrealisti­c for the acquisitio­n of a nuclear power station, which could require tenders to be open for a year or more.

DA energy spokesman Gordon Mackay said the DA — which is strongly opposed to the nuclear build programme — would object to any “unacceptab­le” attempt to rush through the procuremen­t process. The applicatio­n for exemptions was an “apparent bid to accelerate the nuclear new-build programme”. The DA planned to apply, in terms of the Promotion of Access to Informatio­n Act, for access to copies of the relevant correspond­ence between Eskom and the acting chief procuremen­t officer in the Treasury, Schalk Human, regarding Eskom’s applicatio­n.

Mackay said he had been “very reliably” informed that Eskom had applied to Human for an exemption from the standard for infrastruc­ture procuremen­t and delivery management. “At present, sources suggest that Eskom may be seeking an exemption from the requiremen­t to provide a full feasibilit­y assessment for its proposed nuclear new-build programme.

“This would be a significan­t exemption and mean Eskom is embarking on the country’s single biggest public procuremen­t without fully assessing associated risks and consequenc­es for SA’s economy,” he said.

“All state entities are bound by specific procuremen­t standards and requiremen­ts. If procuremen­t standards cannot be met, procuremen­t should not commence. It is difficult to imagine circumstan­ces under which an exemption of this nature might be justified.”

It will be up to new Finance Minister Malusi Gigaba to fill the vacancy of chief procuremen­t officer. The appointmen­t will be closely watched as an indication whether procuremen­t will be tightly controlled under his watch. The post was advertised by the Treasury on Monday.

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