EDITORIAL: SA headed for more nuclear fallout

Thabo Mbeki and his French counterpart Nicolas Sarkozy in 2008. (AP)

Thabo Mbeki and his French counterpart Nicolas Sarkozy in 2008. (AP)

One that is fraught with danger.

The government has made it clear that, by the end of this year, it intends to invite bids for the construction of up to six nuclear reactors along South Africa's southern coastline. It will be the biggest state tender in our history. Cost estimates vary, but even a conservative R300-billion estimate is five times larger than the infamous arms deal.
Factoring in typical time and cost overruns, as well as the associated runaway interest repayment rates, one energy economist calculated that the cost could exceed R1.4-trillion – roughly double the country's projected tax revenue for the 2011-2012 financial year.

South Africa has a dubious history with regard to the procurement of megaprojects. The spectre of the arms deal, under investigation by an official commission, still haunts the government. And, as we speak, an investment company part-owned by the ANC is building boilers for two power stations under state contracts that will see billions flow back to the ruling party.

There are well-founded fears that a new nuclear-build tender will ignite a feeding frenzy, opening up unprecedented opportunities for corruption, political patronage and the abuse of state power for party political gain.

Higher stakes
In our report we reveal that one of the frontrunners for the tender, French nuclear parastatal Areva, splurged huge amounts of money when a nuclear tender was first issued in 2008. There are allegations that this was done at least partly to gratify people close to then-president Thabo Mbeki and his deputy Phumzile Mlambo-Ngcuka, in the hope that this would put the company in pole position. The ANC, now under the leadership of Jacob Zuma, was aware of the potential of the contract as an unprecedented source of patronage. In quick succession, the party recalled Mbeki and withdrew the tender. The French taxpayer has had to shoulder a $2-billion loss stemming from Areva's ill-considered exercise.

In 2012 the stakes are higher. Four years ago the government wanted to build two reactors, with the possibility of others at a later stage. Now it is aiming to build six. The cost of nuclear power has risen exponentially, particularly in the wake of the Fukushima meltdown, which has precipitated sweeping reviews of reactor design. In 2008, Areva had just one rival, Japanese-American nuclear vendor Toshiba-Westinghouse; today, six bidders have thrown their hats into the ring. Competition for the contract will be fiercer – and the scope for sleaze greater.

This week Toshiba-Westinghouse's local subsidiary announced that it was preparing a "realigned strategy in order to better prepare ... to meet the future needs of the South African nuclear industry". Westinghouse did not say so, but it will also be realigning its strategic political alliances – if it has not already done so. Other rivals have been equally busy: Russian nuclear parastatal Rosatom opened its third international office here in July and has been lobbying hard since the beginning of the year.

The last time South Africa flirted with a major nuclear procurement, the ripples spread from the Union Buildings to the Élysée Palace. Vigilance will be needed this time around to ensure a tremor does not become an earthquake. 

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