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Thursday, November 13, 2008

S.Africa to re-examine nuclear plant plan: official


Thu 13 Nov 2008, 11:24 GMT

[-] Text [+] JOHANNESBURG (Reuters) - South Africa's plan to build a nuclear plant to tackle its energy shortages will have to be revisited in the light of the current economic climate, an energy ministry official said on Thursday.

The country plans to build its second nuclear power plant, estimated to be worth billions of dollars and meant to provide 20,000 megawatts of power.

France's Areva and U.S.-based Westinghouse Electric have bid for the contract.

Tseliso Maqubela, acting deputy director general at the Department of Minerals and Energy, said the magnitude of the investment made the decision difficult, especially in the context of the global economic downturn.

"To say that we can proceed with the nuclear build the way we had envisioned would be misleading. All our plans will have to be re-looked at and we will have to come to a happy medium we will have to prioritise," he told an energy conference.

Maqubela said that re-prioritisation did not mean a change of policy, but said it would be difficult to see how South Africa could afford the nuclear plant now.

A decision on the nuclear bid would be made by year-end, and this would be to either give the contract to build the plant to one of the two bidders, or to delay the plant altogether.

He said the government was waiting for state-owned power utility Eskom to decide before acting further, but declined to elaborate on the timing.

"The decision still has to be made by the Eskom board and Eskom has to advise the government. We need advice on how to proceed."

But Maquebela said he saw nuclear power playing a major role in South Africa's energy production in the future.

"There is no doubt that (nuclear power) is going to form a significant part of our energy means going forward," he said.

Brigitte Mabandla, South Africa's new minister for the department of public enterprises, which controls Eskom, told Reuters last month that Eskom had not made a final decision on the bids to build the nuclear plant.

She said the real challenge was the cost of the nuclear build versus coal plants.

Eskom relies on coal for most of its power. The country has one nuclear plant, Koeberg outside Cape Town.

Maqubela said South Africa had steered clear of the worst effects of the financial crisis, but it would still be hit.

"... the South African economy as a whole will not be left unscathed and the energy sector is in many ways impacted," he said at an energy conference in Johannesburg.

Reduced investor confidence in developing economies would also impact South Africa's ability to raise capital for infrastructural expansion in the liquid fuels and electricity sectors.

Worse still, the downgrading of Eskom's credit rating was likely to increase costs of borrowing, he added.

© Reuters 2008. All Rights Reserved.

1 comment:

Anonymous said...

Ouch this is the kind of thing that happens when a nation moves uber slowly. If they had been like Russia and simply gone for it, instead of hesitating, they would have gotten the loans when credit was cheap and widely available, and they would have their plants in a few years time.(plus tens of thousands of jobs building them).