Pushing ahead with R1 trillion nuclear deal will guarantee junk status

Media reports today that the nuclear deal is going full-steam ahead is extremely concerning and will essentially guarantee that South Africa will be downgraded by further ratings agencies, and will make recovering from this status even more difficult.

According to a confidential document, in June Eskom will issue a formal request for proposals for the R1 trillion contract for the nuclear build programme. The winning bidder will be confirmed in March next year and the contract signed and sealed between December 2018 and March 2019.

Fitch stated in no uncertain terms that a key driver behind the decision was that “Eskom, has already issued a request for information for nuclear suppliers and is expected to issue a request for proposals for nuclear power stations later this year. The treasury under its previous leadership had said that Eskom could not absorb the nuclear programme with its current approved guarantees, so the treasury will likely have to substantially increase guarantees to Eskom".

The DA will write to the Chairperson of the Portfolio Committee on Public Enterprises, Ms Dipuo Letsatsi-Dub, to request an urgent meeting of the committee in order to ensure that Parliament, as a key oversight body, will fully interrogate all aspects related to the nuclear deal.

The undeniable fact is that South Africa cannot afford, and does not need, the nuclear deal. Indeed, international ratings agencies agree and this deal has been repeatedly cited as a cause for great concern and a key factor in downgrades not only for Eskom, but the country as a whole.

Last week, Standard & Poor’s Global and Moody’s downgraded the long-term corporate credit rating on Eskom from B+ to BB-.

These downgrades have already and will continue to have a devastating effect on our economy. Jobs will be lost and the cost of living will increase, which will hurt the poor.

The ANC-led government is ignoring these facts and the massively negative effect on ordinary South Africans only reaffirms that they no longer put the best interest of our country or its people first.

Statement issued by Natasha Mazzone MP, DA Shadow Minister of Public Enterprises, 9 April 2017