THE SA NUCLEAR FINANCIAL TIME BOMB
Mr Capps, CEO of Dominion, one of the leading US utilities bidding for government money said: “We aren’t going to build a nuclear plant anytime soon. Standard & Poor’s and Moody’s (debt-rating agencies) would have a heart attack. And my chief financial officer would, too.” Not even the World Bank invests in nuclear power. Why should the South African people be left to foot the bill for this unnecessary, hugely expensive project?
Based on the Final Environment Impact Report (FEIR) and the Detailed Feasibility Report (DFR) prepared by the Pebble Bed Modular Reactor (PBMR) nuclear power project, researcher Steve Thomas concluded that South Africans would end up having to pay huge costs.
Thomas’s report shows that about R1 billion has already been spent by Eskom and over the next 5-10 years, South Africans could be expected to finance investment for more than R10 billion for the demonstration phase of the PBMR – including buying the demonstration plant. A further R36bn would be needed to buy commercial units.
South Africans are probably not aware that they would be paying for “decommissioning” (closing down and cleaning up) the demonstration plant and the commercial plants and yet no estimates for these costs have even been planned. Based on what has happened elsewhere in the world, these costs could run into tens of billions of rand – which would all be added on to electricity bills or taxes.
Until 2005, Eskom Enterprises was legally separate from Eskom although100 per cent owned by Eskom. Eskom Enterprises’ record was poor and investments of over R1bn had to be written off in 2003. Until then, its separate legal status meant it could protect electricity consumers from losses. However, now it is a division of Eskom with no corporate separation there is a risk that losses in the Enterprises division will ‘leak’ into regulated businesses. According to European Union law, regulated companies must be fully and legally separated from other businesses to avoid this risk.
How much has the PBMR project cost so far? By the end of April 2001, they had spent R437 million, plus R80 million in May 2001. By July 2002, this had risen to R684.2 million with an estimate that to take the project to feasibility stage would cost R1013 million. In August 2003, Terblanche stated that the PBMR development had cost R1.5 billion. “Since then,” Thomas stated, “expenditure has continued on a short-term basis but it is not clear who has funded it, or what the total development costs to date are”.
In 2004, Terblanche said the PBMR project was costing a lot more than R50 million per month. In October 2004, the government gave support of up to R500 million for the PBMR venture to pay for running costs and design development costs. And in February 2005, when the government’s budget was announced, government support had increased from R500 million to R600 million. Thomas stated: “It is not clear whether this government money was a loan or a grant or whether it represented an increase in the government’s stake in the PBMR project. It remains uncertain who will fund the demonstration phase”.
But what is clear is that two thirds of the money spent on this project has been from the South African public. And the next phase of demonstration will require even more money – at least seven times as much as has been spent so far.Potential investors have been mentioned, but these appear to be highly speculative.
In August 2005, it was announced that the government would take a direct 30 per cent stake in PBMR (Pty) Ltd and it is unlikely that private investors, especially from outside South Africa will take the remaining 36 per cent shares in the project. So the South African public will be expected to pay for at least R9 billion of the R14.5 billion that the PBMR will cost. And as costs go up, so the South African public will pay more.
Do the people of this country know that they are the major shareholder in a project that is costing billions and delivering nothing?
Yours sincerely
INGELA RICHARDSON
