/ 28 December 2015

Nuke procurement: Cabinet authorises request for proposals

Nuke Procurement: Cabinet Authorises Request For Proposals

The Department of Energy (DoE) officially confirmed on Saturday that Cabinet has authorised the department to issue a request for proposal (RFP) for South Africa’s nuclear procurement programme.

This is the first official government statement regarding the decision that was made during the infamous Cabinet meeting on 9 December, which occurred just before Nhlanhla Nene was fired as finance minister.

The closest media got to a confirmation was during a question and answer session with Nene’s successor (and predecessor) Pravin Gordhan, who said government would proceed with a formal procurement process only if it was affordable.

A major query regarding this development was how government would pay for the construction of the 9 600 MW nuclear power stations. The DoE said that Cabinet approved a process during this meeting where the business proposals submitted through the RFP process will determine the final funding model.

Media reports on Thursday revealed a Gazette that paved the way for the department to issue RFPs. Up until that point no official press statement had confirmed reports that Cabinet had taken the next step in procuring nuclear energy.

DoE director general Thabane Zulu confirmed in a statement on Saturday that these next steps were approved at a Cabinet meeting on 9 December.

He said the funding model will be “submitted to Cabinet thereafter for final approval and implementation”.

Committed to full transparency
Zulu said these decisions were made after Cabinet received a report back from the energy security Cabinet sub-committee, which had considered the work being done by both the DoE and Treasury in respect of the funding and financing of the programme.

“The decision to proceed with issuing the request for proposal will further assist in developing a funding model,” he said.

“Proposals in this regard will first be submitted to energy security Cabinet sub-committee for recommendation before being considered by Cabinet.

“Any decision to proceed further with a Nuclear New Build Programme will therefore only take place after the RFP process has been completed and a final funding model has been developed, and then referred back to Cabinet for consideration and approval.

“The Department of Energy is committed to cost effectiveness and full transparency,” he said. “We will ensure that the integrity of the process is safeguarded at all times and is done within the existing fiscal policy framework of our government.”

Zulu said the decision to proceed with developing the Nuclear New Build Programme was taken in principle by Cabinet in June 2015.

“However he said this was subject to more work being done on the proposed funding model; the risks and mitigation strategies; and the contributions by countries as contained in the inter-governmental agreements.”