/ 30 October 2014

Russians muscle all others aside in nuclear bid

Construction of the Kalininskaya nuclear power plant near Moscow. Russia's energy company is angling for a monopoly in South Africa.
Construction of the Kalininskaya nuclear power plant near Moscow. Russia's energy company is angling for a monopoly in South Africa.

We don’t want to share so give it all to us. This was the essence of the pitch made by Russia’s state atomic energy company, Rosatom, at a luxury resort in the Drakensberg mountains in KwaZulu-Natal last week. 

A delegation of Russian nuclear experts made it clear that they want to have a monopoly on the entire supply chain of nuclear energy.

Two sources close to last week’s meeting gave details of how the Russians argued for exclusivity. Rosatom believes its services are unique and therefore they cannot partner with any other country.

The cost to South Africa’s taxpayers has been estimated to be anything between R500-billion and just less than R1-trillion at current exchange rates.

The Russians hope to build eight new VVER nuclear power plants without sharing the workload with any other country. The VVER is a pressurised water reactor originally developed by Russia. 

They argued that this system was used by 11 countries worldwide and was adequately efficient.

Installed capacity assurances
South African nuclear experts questioned the system’s capacity and whether it would be able to deal with disaster. But the Russian contingent assured them, saying that it would have a total installed capacity of up to 9.6 gigawatts.

Media reports on the meeting said about 50 South African experts were present at the meeting, which took place at the Champagne Sport Resort in the central Drakensberg.

The South African delegation was led by the department of energy’s deputy director general for nuclear energy, Zizamele Mbambo, and the Russian delegation by Nikolay Drozdov, Rosatom’s director of international business.

The Russians stuck to their initial demand that they wanted full control of the nuclear programme, from supplying fuel to the nuclear plants to managing the plants’ lifecycle, as well as training its staff.

Rosatom would partner with the department of higher education and training to teach students at Russian institutes that specialise in nuclear energy. It also wants to be involved in the construction of a Russian technology-based multipurpose research reactor. 

The company argued that, by signing a deal with it, South Africa would benefit from the creation of employment and an improved gross domestic product per capita. 

Pitch sweetener
Rosatom’s representatives tried to sweeten their pitch with a promise of creating about 15 000 additional jobs during the construction of the plants. They said South Africa would also benefit from increased tax revenue – more than $3.4-billion – which would boost the country’s economy.

At the insistence of the South African government, the Russians said Rosatom would partner with local companies, which would generate revenue and lead to technological development. 

Mbambo did not deny that this was the essence of Rosatom’s proposals, but he added: “We can’t discuss details to protect the propriety of vendor countries.”

The department was planning to host its next vendor in November, and the vendor countries would included France and China. “We are planning to have the [China] agreement finalised and signed in November.”

He reiterated that the vendor countries would showcase their technology and make proposals. “Then they must present their comprehensive proposals on how they want to co-operate,” Mbambo said. 

When asked about a timeline, he said the department hoped to conclude the vendors’ presentations by the end of the year.

“Then we will decide on a procurement process in line with this,” he said, adding that only then would it be presented to the Cabinet for approval.

Rosatom said the meeting’s objective was to present its technological capabilities and its approach to localisation, skills transfer and development. Its 18-strong delegation was made up mostly of engineers, it said.

The company said there was no intention of keeping the meeting secret, but the discussions were confidential as they entailed the disclosure of intellectual property.