MAHLOBO RUSHES NU­CLEAR DEAL

Nu­clear plan could be ready in two weeks’ time as en­ergy min­is­ter forges ahead

CityPress - - Front Page - SETUMO STONE setumo.stone@city­press.co.za

As En­ergy Min­is­ter David Mahlobo forces his nu­clear power plans into ac­tion, of­fi­cials at his depart­ment are work­ing week­ends to fi­nalise the coun­try’s re­viewed in­te­grated en­ergy re­source plan – four months ahead of sched­ule.

The plan to de­ter­mine the en­ergy mix the coun­try needs was ex­pected to be fi­nalised in Fe­bru­ary next year, but will now be fin­ished in the next two weeks.

“We would have been talk­ing Fe­bru­ary, but now we are talk­ing Novem­ber 14,” said an in­sider, vouch­ing for the level of hard work the min­is­ter was putting into his job.

This would en­able Mahlobo to make pro­jec­tions of the coun­try’s fu­ture en­ergy de­mands based on “em­pir­i­cal ev­i­dence”.

Last week, Fi­nance Min­is­ter Malusi Gi­gaba told City Press that nu­clear en­ergy was nei­ther af­ford­able for the slug­gish econ­omy, nor im­me­di­ately nec­es­sary.

Mahlobo, who has been in his new job for just more than two weeks af­ter three years as state se­cu­rity min­is­ter, is now on a col­li­sion course with Gi­gaba and Trea­sury.

The nu­clear en­ergy plan is ex­pected to cost South Africa about R1 tril­lion, an amount that econ­o­mists and politi­cians from across the spec­trum – in­clud­ing the ANC – say the coun­try’s strug­gling econ­omy can­not af­ford.

Mahlobo told City Press yes­ter­day morn­ing that gov­ern­ment should not be “reck­less”, but en­ergy was cen­tral to the coun­try’s se­cu­rity and shouldn’t only be treated as an eco­nomic is­sue.

In the op­po­site room, a group of se­nior man­agers waited for Mahlobo to join them for a meet­ing on the in­te­grated en­ergy re­source plan.

“Peo­ple who say we should not in­vest do not un­der­stand that, each and ev­ery day, more com­pa­nies are clos­ing down and more young peo­ple are get­ting out of em­ploy­ment and even more out of the ed­u­ca­tion sys­tem. We are cre­at­ing sol­diers of un­em­ploy­ment,” Mahlobo said.

“Any re­spon­si­ble gov­ern­ment will plan well be­cause it is be­com­ing a na­tional se­cu­rity is­sue. One day these peo­ple would have noth­ing to lose and they will take this gov­ern­ment out. The ANC must never be de­terred in the face of po­lit­i­cal par­ties who want to stop us from im­ple­ment­ing our pro­gramme.”

Mahlobo said much of the crit­i­cism against the nu­clear project was based on an “un­founded nar­ra­tive” about “who is go­ing to win the ten­der”, which was none of his con­cern be­cause, “if there is any pro­cure­ment that is go­ing to be done, the South African laws are go­ing to be fol­lowed”.

The coun­tries with the lead­ing tech­nol­ogy are France, Rus­sian, the US, South Ko­rea and China. Com­pa­nies from these coun­tries as well as their gov­ern­ments have been ag­gres­sively woo­ing South Africa’s de­ci­sion-mak­ers and work­ing to sway public opin­ion their way. But many be­lieve that Pres­i­dent Ja­cob Zuma’s cosy re­la­tion­ship with his Rus­sian coun­ter­part Vladimir Putin, as well as Mahlobo’s own close ties to the Krem­lin and its se­cu­rity es­tab­lish­ment, has al­ready tilted the scales in that coun­try’s favour. When Mahlobo’s pre­de­ces­sor Mmamoloko Kubayi was moved out of the depart­ment in the Cab­i­net reshuf­fle last month, there was wide­spread spec­u­la­tion that it was be­cause she was not mov­ing with haste on the nu­clear pro­gramme.

Mahlobo con­firmed his close ties with “the lead­er­ship of the Rus­sian fed­er­a­tion”, ad­ding that not many peo­ple have ac­cess to the Krem­lin, but he does be­cause in his pre­vi­ous job they worked closely to­gether on in­tel­li­gence op­er­a­tions. How­ever, he de­nied tak­ing con­victs-turned-busi­ness­men Kenny Kunene and Gay­ton Macken­zie to the Krem­lin dur­ing a re­cent trip to Moscow.

Mahlobo said his start­ing point was that “ev­ery­one in the coun­try agreed that, for the econ­omy to work and in or­der to re­duce un­em­ploy­ment, you need to have an en­ergy so­lu­tion”.

“In our case, we say we want to en­sure se­cu­rity of en­ergy and it must be sus­tain­able. That is, you do not want to have dis­tur­bances that one day you wake up you do not have suf­fi­cient en­ergy or you can­not be able to drive in­vest­ment.”

He said that although the af­ford­abil­ity of the project was a “big is­sue”, the need for ex­tra en­ergy was gen­uine and le­git­i­mate.

South Africa uses both re­new­able and non­re­new­able en­ergy sources, and the sec­tor con­trib­utes di­rectly and in­di­rectly more than 33% of gross do­mes­tic prod­uct. Other en­ergy sources in the mix in­clude coal, gas, wa­ter, so­lar and wind.

Mahlobo said “the prin­ci­ple of pace, scale and af­ford­abil­ity ap­plies to the en­tire en­ergy mix”.

“The start­ing point is that we do not have en­ergy that we can guar­an­tee for fu­ture gen­er­a­tions be­cause it is fi­nite. What­ever source you choose, you must be able to say at what scale, which is the vol­ume you want or the de­mand met,” he said.

He said that pro­ject­ing fu­ture en­ergy de­mand for eco­nomic growth was “a func­tion of say­ing who is go­ing to take this en­ergy up like in­dus­tries, pri­vate sec­tor and do­mes­tic us­age”.

Mahlobo said build­ing nu­clear power sta­tions cre­ated new in­dus­tries be­cause it was cap­i­tal in­ten­sive and would take more than 10 years to build.

“Yes, it is ex­pen­sive when you are build­ing, but im­me­di­ately [af­ter] a nu­clear plant has been built and [has started] to op­er­ate, it pro­duces the cheap­est elec­tric­ity than any source. It is ac­tu­ally less than 35c per kilo­watt hour, which is very cheap. The re­new­ables are on av­er­age around 80c per kilo­watt hour, and some are around R1.”

He said the tech­nol­ogy in nu­clear re­ac­tors had also im­proved and would re­duce emis­sions. “Plus we have a good track record be­cause we have never had re­ports that Koe­berg [Nu­clear Power Sta­tion in Cape Town] has caused prob­lems in terms of safety and is­sues of en­vi­ron­ment,” he said.

Mahlobo said his ap­proach would be in­formed by a “build, op­er­ate, train and trans­fer” model whereby if gov­ern­ment did not have the funds to build it, it would go to the mar­ket seek­ing an in­vestor who would build at their own risk.

“When op­er­a­tions start then gov­ern­ment comes in. The in­vestor will want to re­coup the in­vest­ment and make gains. Gov­ern­ment then op­er­ates on the prin­ci­ple that the cost should not be passed to the end user, and it does so by set­ting the tar­iff.”

Mahlobo said it was crit­i­cal to get the pro­jec­tion fig­ures right to avoid costly mis­takes, and the mar­gin of er­ror must be less than 15%.

“The growth of the econ­omy must be our pre­oc­cu­pa­tion and ar­eas of growth must be cho­sen very well,” he said.

“We will al­ways work with ex­perts be­cause I do not pos­sess all the wis­dom. There are peo­ple who have been there and they have seen it work­ing.”

Mahlobo said he had no de­sire to see the coun­try bor­row money to fund the nu­clear project.

“My first in­ten­tion is to say who has the ap­petite to put the struc­ture on the ground and they take the risk,” he said.

Eskom spokesper­son Khulu Phasiwe said if the in­te­grated en­ergy re­source plan showed the nu­clear pro­gramme could go ahead, they would be­gin the ten­der process im­me­di­ately.

PHOTO: TE­BOGO LETSIE

RUS­SIA’S FRIEND En­ergy Min­is­ter David Mahlobo at his of­fice in Pre­to­ria

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