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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