Nuclear deal would have dealt a blow to SA economy —Fuzile

Had the controversial nuclear deal been allowed to go through, South Africa’s economy would have been in serious jeopardy, the Zondo commission of inquiry into state capture heard on Monday.

During his testimony on Monday, former treasury director general Lungisa Fuzile told the commission — chaired by Deputy Chief Justice Raymond Zondo — that “if nuclear had proceeded … actually this country would have been in trouble”.

“This was the biggest procurement ever in the history of the country, yet the processes were rushed,” Fuzile added.

The drive for nuclear energy has been cited by ratings agencies as a major reason for credit downgrades, because the reported R1.6-trillion cost would have been carried by Eskom and backed by the state.

In April 2017, the Western Cape high court set aside the nuclear deal signed by government, declaring it unlawful and unconstitutional.


Fuzile was asked to corroborate various elements of former finance minister Nhlanhla Nene’s testimony before the commission last October. Nene was axed by Zuma on December 9 2015.

The day before his axing, treasury officials — including Nene and Fuzile — attended a meeting with members of Cabinet about the nuclear deal. During his testimony, Nene alleged that he was pressured to approve the deal.

READ MORE: #StateCaptureInquiry: Zondo to hear from treasury top brass

At the December 8 meeting, Zuma allegedly confronted Nene about his unwillingness to approve the deal. The former president purportedly confronted Fuzile about this, accusing him of stymying the 2014 PetroSA-Engen deal.

“You and your former minister [Pravin Gordhan] had stopped the Engen-PetroSA project,” Zuma allegedly said.

According to Fuzile, Zuma also said that in other countries “finance ministers do not tell presidents that there is no money”.

Last year, Nene told the commission that he was seen as “the person standing in the way of the nuclear deal” and was effectively accused of insubordination by his colleagues.

The deal was presented to Cabinet by a committee from the department of energy. The committee’s presentation did not reflect treasury’s objections to the deal, Fuzile explained on Monday.

Fuzile said that on the day of the meeting, the rand was 40% weaker than the energy department had stated in its presentation.

Fuzile also corroborated Gordhan’s previous testimony about the PetroSA-Engen deal. In November last year, Gordhan recounted how Zuma allegedly tried to push through the deal despite questions relating to the cost of the acquisition.

READ MORE: Reluctance to follow due process in nuclear, PetroSA deals says Gordhan

PetroSA wanted to acquire Petronas’ stake in Engen which, according to the energy department, amounted to R18.68-billion.

But, according to Gordhan, it became clearer that as the transaction evolved that its true value was closer to between R12-and R14-billion.

Gordhan said he questioned who would have benefitted from the R6-billion difference.

The acquisition of the stake in Engen ultimately failed because PetroSA did not fulfill the financing conditions and due diligence was not performed, Gordhan said.

On Monday, Fuzile agreed that the deal was rushed. “There was a hurry to conclude it without the due diligence,” he said.

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Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

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