Finance Minister Trevor Manuel last week upped the government’s contribution to the pebble bed modular reactor (PBMR) to R9-billion, with a commitment to spend R6-billion over the next three years. The money keeps rolling into what was originally a R2-billion project — but whether it is a hugely expensive dud or a money-spinner will not be known for at least five years.
Critics say that a possible R40-billion price tag for Eskom’s demonstration plant and the 24 commercial units does not reflect decommissioning costs for those plants when they stop producing electricity.
PBMR enthusiasts say the pay-off will be sizeable if the project succeeds. They hope it will create more than 56 000 jobs and provide exports netting 8% of GDP when South Africa supplies 2% of the world’s electricity.
But critics question whether South African taxpayers should shoulder such a heavy cost of research and development for risk-laden, untried technology.
Despite Eskom’s plans to scale down its investor role, the programme has not been able to expand its private sector investment beyond Westinghouse, which holds a 15% share in PBMR through Toshiba.
PBMR has revealed that by October 2006 Westinghouse had invested a total of R450-million, Eskom had invested R818-million, the Industrial Development Corporation R457-million and the departments of public enterprise and trade and industry R1,76-billion.
Before pulling out in 2002 United States company Exelon had invested R101-million.
Without public financial statements or an annual report it is difficult to judge where the money is going or whether it is being prudently spent. The company does not report because it generates no income, said PBMR spokesperson Geraldine Bennett.
She said money had been spent on a demonstration plant, a pilot fuel plant at Pelindaba and technology development programmes. PBMR has also placed long-lead contracts for sub-systems, increased its staff and supported mathematics and science education.
‘If the people will support it and be proud of it and love it, it will be such a unifying process,” she said, comparing the project’s feel-good potential to Nelson Mandela’s release from prison and South Africa’s Rugby World Cup win in 1996.
Such public enthusiasm has yet to emerge. Earthlife Africa, an environmental lobby group opposed to nuclear power, is calling on Public Enterprises Minister Alec Erwin to resign over mismanagement of the project.
Before any construction of the nuclear station can begin PBMR requires a positive record of decision from the environmental affairs and tourism ministry as well as a licence from the national nuclear regulator.
The project received an additional R462-million from this financial year from the department of public enterprises last week, with the explanation that ‘progress on the project from basic design to requiring long-lead materials and hardware necessitates funds in excess of those committed by existing shareholders”.
The total adjusted appropriation for PBMR in the current financial year is R1,2-billion.
The reactor was established in 1999 to develop an innovative nuclear reactor based on German technology. Pebble bed reactors are supposed to be much safer, more cost-efficient, quicker to build and smaller than the pressurised water reactor currently used in Koeberg.
Projected costs have jumped by more than seven times the initial estimates since 1999, according to a study of PBMR by Steve Thomas of the University of Greenwich. He anticipates that taxpayers will continue to subsidise the project beyond the costs currently provided by the company.
The plant will be complete by 2011 and the first commercial unit will be available from 2013.
Bennett said Eskom had signed a letter of intent to buy the demonstration plant and 24 commercial units subject to certain conditions. ‘But it’s not a foregone conclusion,” she admitted.
Both the Americans and Chinese are known to be developing modular reactor technology and could be significant competitors.
Eskom needs to develop new power stations to meet an electricity supply gap of between 3 000mW and 4 000mW, said Andrew Kenny of the energy research institute centre at the University of Cape Town. In the absence of steps to increase our energy supply, Kenny said the gap would grow roughly in line with economic growth.
Independent consultant and nuclear physicist Kelvin Kemm described PBMR’s admittedly small R23-million contract with the US energy department as ‘a huge stamp of approval”. The department contracted PBMR in preference to world nuclear technology leader Ariva to work on hydrogen production.
Kemm said PBMR technology — at R1,5-billion for a unit that produces 165mW — is much cheaper to construct than the technology used in Koeberg, which produces about 1 000mW.
Because PBMR does not require water, he said, these relatively small units could be placed close to areas of demand, reducing transmission costs.