Nuclear rollout on cards
Government to ‘test market’ for energy capacity
THE GOVERNMENT says it should be ready to “test the market” and issue a request for proposals to develop its nuclear energy capacity, by the end of the month. The director-general for energy, Thabane Zulu, told the National Assembly’s public enterprises committee yesterday that nuclear remained the cleanest and cheapest form of energy for the country.
“We can’t adopt a fixed position. We have to be dynamic and our approach always has to be cost effect.”
A technical team comprising the Department of Energy, the Treasury and independent power producers was in discussions on the procurement strategy for the project, Zulu said.
Speaking on the sidelines of the meeting, Zulu told journalists the government was just about ready to test the market and that a funding model was still under discussion.
The cabinet took a decision in December for the Department of Energy to look at ways to expand the country’s nuclear capacity.
Eskom chief executive Brian Molefe told the committee: “The development of further nuclear capacity is urgent in South Africa.”
Zulu had said it was still the intention to generate 9 600MW of power from nuclear energy. The request for proposals would determine the country’s state of readiness to proceed with the nuclear-build programme and the best funding model to use.
This was not the same as going out to tender, Zulu stressed, and the process going forward would be determined by the responses it received to its request for proposals.
He did not want to commit to a tender date and said the government wanted to test the market for a “reasonable period’’ first.
“The market will determine what’s the best, effective method and then we can develop a funding model. Our pricing strategy will be determined by the market.”
Zulu said it was critical for the country to improve its credit rating to attract financing for the project.
Ratings agency Moody is expected in the country next week for its annual review.
Zulu said while the government had not yet put a price tag on the project, it was likely the nuclear-build programme would need substantial investment in its beginning phases. It was not the government’s intention for the project to become a burden to taxpayers, he added.
Zulu said the government had already determined that five countries could offer South Africa what it was looking for in terms of nuclear power, but that it was committed to complying with the International Energy Agency in considering its options.
“We have to be very open-minded when we test the market and based on what we receive we might have to re-think our strategy before advising the government on the best route to go,’’ he said.