/ 17 September 2008

Eskom nears decision on nuclear-power contract

Eskom is nearing a decision on whether to award a contract to build nuclear-power facilities to France’s Areva or Westinghouse Electric, a unit of Japan’s Toshiba.

The power utility’s general manager, Brian Statham, told Reuters in an interview on the sidelines of the FT-WEC energy conference that the utility would reach a decision in days.

”They’re expecting an announcement within the week,” Statham said.

However, an Eskom spokesperson said the company had not set a particular date for announcing a decision on the contract, which could be worth billions of dollars.

”The process is well under way, we can’t state any particular date. Our intention is to finalise this process by the end of the year,” Fani Zulu said.

Statham said Eskom had a number of potential locations for the power plant and the exact location will depend on the type of plant chosen.

The consortium led by Areva is proposing to build two 1 650MW reactors while Westinghouse wants to build three 1 140MW reactors, Eskom said in a statement this week before a scheduled board meeting set for Tuesday.

It was unclear whether the nuclear plant tender was discussed at the board meeting.

South Africa’s largely coal-driven Eskom aims to double output by 2025, with nuclear plants supplying more than a quarter of future energy compared with about 6% now.

Eskom’s lack of investment in new generating capacity and an aging power-generating infrastructure has seen it struggle to meet fast-growing electricity demand in South Africa.

Key platinum and gold mines in South Africa were shut for five days in January when Eskom faced a near-collapse of its power grid, and big aluminium smelters were also affected during the height of the power crunch in Africa’s biggest economy.

The utility has since asked big power users and households to cut consumption to ease pressure on the national grid.

South Africa’s National Treasury has budgeted R60-billion over the next three years to help Eskom pay for its R343-billion, five-year expansion programme.

Eskom plans to raise the rest from the government, capital markets and development financiers, such as the World Bank. — Reuters