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Dear Honourable Minister Pravin Gordhan,
In line with our duties as citizens, we write to tell you that our beloved republic is at risk of massive, unlawful and uncertain expenditure on a new batch of nuclear reactors.
The department of energy suggests that plans will be made this year for the procurement of 9 600MW of nuclear energy. Media reports indicate the cost at R1-trillion, the largest single state expenditure in our history.
The public has a right to know about this and the inherent risks to our economic future.
We submit that purchasing this nuclear power will be unlawful unless you intervene. The need for this procurement is not certain and it will be a major financial risk for generations. We risk not having funds available for poverty eradication and education. There is a distinct possibility of economic and political instability arising from this procurement in the coming decades.
Therefore, we implore you to exercise the utmost restraint in considering your authorisation for this procurement.
The department of energy promulgated the integrated resource plan of 2010 in early 2011. This is the country’s electricity generation plan for the next 20 years. It is to be reviewed every two years and it states that commitments must be made for 3 200MW of nuclear power by 2012 and that the additional 6 400MW of nuclear power should be confirmed in subsequent plans.
The department’s 2010 plan states that there are significant risks and uncertainties relating to nuclear energy, namely electricity demand and the costs.
The plan recommends further research on the costs of decommissioning and managing waste. The costs of a nuclear accident are not calculated in the plan.
In November 2011, the National Planning Commission called for a rethink on nuclear power in 2012. The integrated resource plan 2010 states that it is possible to meet South Africa’s electricity supply needs without nuclear power.
Minister, we humbly submit that a commitment to procure all 9 600MW before future iterations of the integrated resource plan will prevent state organs from procuring the most cost-effective option for a significant portion of our energy expenditure over the next 20 years. We run the very real risk of building extremely expensive plants when we may not even need that electricity.
The purchase of a number of nuclear reactors, as envisaged by the department of energy, would bind the state to contractual undertakings with nuclear vendors for the next 20 years. We would not be able to withdraw from these contracts without substantial financial penalties, especially if contracts are entered into with foreign investors from countries with which South Africa has signed bilateral investment treaties protecting investor rights. These would cover contracts made with foreign nuclear vendors.
We respectfully add that the government itself appears to be unsure how much nuclear power will ultimately cost, giving figures between R400-million and R1-trillion.
The department of energy’s current plan would stop the state from being able to carry out its constitutional duties as set out in the Public Finance Management Act and the Promotion of Administrative Justice Act.
These laws require the state to ensure it has taken all reasonable steps to promote the most efficient, economic, cost-effective, transparent, accountable and competitive use of public funds.
The risks of cost overruns and massive long-term debt are significant. The integrated resource plan 2010 appears to promote generation III+ nuclear technology, which has been beset with cost overruns and delays. For example, construction began on Areva’s Olkiluoto reactor in Finland in 2005; it was to be completed in 2009 but will only be completed in 2014, if not later. This reactor was budgeted at €3-billion but cost overruns have increased this figure to €5.3-billion. Areva and the Finnish utility TVO are fighting each other in court over the delay.
The public has a right to know about and give their input regarding such costs before the treasury makes a decision. The public needs to see the bid documents. A public hearing into the costs of nuclear power would assist the treasury to ascertain the real risks of this planned procurement.
For these reasons, we call on you to clarify the intentions of the state regarding the extent of procurement of nuclear power and that you do not authorise 9 600MW of electricity from this source.
Tristen Taylor is the project co-ordinator of Earthlife Africa, Johannesburg
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