Category Archives: Business & Industry

Analysis: South Africa is stuck in a failing second industrial revolution – Let’s move beyond it

Daily Maverick, dirk de Vos, 24 May, 2017

Last week, another busy news week in South Africa, saw two significant events. The one was the announcement by General Motors (GM) that after 90 years, it was pulling out of South Africa. The other was the presentation by the new Minister of Energy of her department’s budget speech. Both events elicited strong debate. GM’s decision has been variously ascribed to South Africa’s poor governance and the country’s newly acquired “junk credit status”. The Minister of Energy’s speech confirmed a long-standing commitment to the development of the oil sector, renewed an effort to get a gas economy going and to get nuclear procurement back on track. Renewable energy procurement, the one outstanding success of her department, gets to be moved under the very poorly performing Central Energy Fund and the whole programme gets to be reviewed. Both events highlight the continual failure of South Africa’s industrial policy and a singular failure of even imagining anything better. By DIRK DE VOS.

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Warning issued that nuclear ruling may pose risk to legality of IPP programmes

Engineering News, 11 May, 2017

The recent nuclear ruling, which set aside the Ministerial determinations designed to facilitate the procurement of nuclear power stations, may also carry risks for the legality of the various independent power producer (IPP) procurement programmes, which are proceeding on the basis of determinations that were likewise not subjected to public consultations.

This view is expressed in a risk assessment drafted by Craig Morkel for discussion by the South African Independent Power Producer Procurement Association (SAIPPA). Morkel, who is projects director at iKapa Energy, wrote the piece in his personal capacity.

… “The nuclear ruling made it clear that Nersa cannot simply rubberstamp a determination written by the Minister and is required to, independently, apply its mind before offering its concurrence. It also indicated that such consultations need not be exhaustive,” Morkel said in an interview with Engineering News Online.

He also argued that the judgment provided a genuine opportunity for introspection and review so that future processes were not only fully in line with the Constitution, but also far more transparent and accessible to all stakeholders, not only large industry participants.

“We can’t allow the IPP baby to be thrown out with the nuclear bathwater,” Morkel quipped. …

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Eskom has terminated the nuclear RFI after the high court ruling

Engineering News, 4 May, 2017

… Eskom’s chief nuclear officer David Nicholls said earlier on Twitter: “I want to confirm that Eskom has terminated the nuclear RFI.” …

Russia‘s Rosatom said on Wednesday it was still committed to taking part in a transparent and competitive bidding process to build nuclear power plants in South Africa after a court blocked the plans last week.

South Africa‘s Energy Minister said on Tuesday the government may appeal the judgment which declared a cooperation pact with Russia‘s State-owned nuclear company Rosatom unlawful.

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Pro-nuclear lobby still fired up on deal despite court’s refusal

Business Day, Neil Overy, 3 May, 2017

The government is determined to build power plants driven by reactors, but unaffordable agreements and huge costs loom if Russia’s Rosatom wins bid

Last week’s ruling by the High Court in Cape Town that set the procurement of 9.6GW of nuclear right back to square one apparently did little to damp the enthusiasm of the small pro-nuclear lobby.

Only a few days after the ruling, all the usual suspects — President Jacob Zuma, Eskom, Rosatom and the South African Nuclear Energy Corporation — said the procurement would continue. This would presumably take after following a successful appeal against the court’s findings or through the issuing of a new “legal” determination by the energy minister.

Big potential financial pitfalls await SA should the deal proceed in a new form.

The Westinghouse Electric Company, crippled by a $10bn debt, filed for bankruptcy in March, threatening the survival of its parent company Toshiba, which is now trying to sell its profit-making chip manufacturing holdings to cover the debt.

Westinghouse’s debt is largely the result of delays and cost overruns in the construction of two new nuclear power stations in the US. The construction of Waynesboro plant in Georgia is four years behind schedule and $3bn over budget and the plant in Jenkinsville, South Carolina. is two years behind schedule and $5.2bn over budget. The future of both is in jeopardy. What this confirms is that the construction of nuclear power stations only happens with the support of massive state subsidies.

In France, Areva and its parent EDF would also be filing for bankruptcy were it not for the generosity of the French and British treasuries and their reluctant bill-paying citizens.

EDF has a debt of $39bn (and future decommissioning and waste storage liabilities of about $50bn), despite a recent $9bn injection from the French government, which has made it clear that it wants to reduce its financial commitment to EDF.

EDF’s problems stem from the delays and cost overruns of its new nuclear power plants in France, China and Finland. In France, Flamanville 3 was supposed to be operational by 2012 at a cost of $3.5bn. It is now scheduled to operate in late 2018 at a cost of $11bn.

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Western Power Corridor pact can be revived, says Reuel Khoza

Business Day Live, 21 February, 2017

The Africa Energy Indaba hears Inga 3 hydropower project and associated infrastructure development is possible with political vision and will

The Western Power Corridor could still be revived with committed political leadership, Reuel Khoza said on Monday.

The corridor was a cooperative agreement among five Southern African countries established in 2003 to develop the Inga 3 hydropower project and associated infrastructure.

Khoza, a former Eskom chairman, is now involved in renewable power projects.

One of the speakers on a ministerial panel on increasing regional energy trade and co-operation at the Africa Energy Indaba starting on Tuesday, he is chairman of Aka Capital and independent power producer Globeleq as well as the author of several books on governance and leadership.

The corridor involved SA, Angola, Botswana, the Democratic Republic of Congo and Namibia, each of which was represented equally by its utilities in Westcor, a joint venture company. Westcor conducted feasibility studies into Inga 3, which would have provided about 5,000MG of power. Westcor also aimed to develop the 45,000MW Grand Inga project.

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