Treasury contradicts DoE: No feasibility study conducted

2 December 2016

A reply from the National Treasury received by the DA today directly contradicts a statement by the Deputy Director-General of the Department of Energy (DoE) on Tuesdayon the feasibility study conducted on the nuclear build programme.

The reply states that “The Department of Energy has not yet completed a full feasibility study with a cost-benefit analysis”. However, on Tuesday the Deputy Director-General’s stated that a report of the costs associated with the nuclear build programme had been conducted and finalised, in a meeting of the Portfolio Committee on Energy.

This report has previously been used as an excuse to delay public hearings into the nuclear build programme, as it was deemed to be preliminary and not finalised.

To ensure that the South African economy is not placed under further strain by an unaffordable and unpalatable nuclear build programme, the DA will be requesting the following documents in terms of the Promotion of Access to Information Act:

- A report conducted by National Treasury, titled: ‘Assessment of the Nuclear Feasibility Study’

- An assessment by the Chief Procurement Officer of the draft procurement documents

The key question is whether or not the cost-benefit report has been finalised, if not, why not?

Why is the government continuing to hide its own cost and financing assumptions surrounding the nuclear build programme?

Is it because government itself is aware of how blatantly unaffordable it is and how unpalatable it is in an environment where South Africa is experiencing low-to-zero growth and faces continuing ratings pressures due to heightened political uncertainty.

Preliminary work already completed on the nuclear build programme, which was made available to the Portfolio Committe on Energy on Tuesday, includes models which seem improbable, as they suggest gearing 99% for the proposed nuclear build programme.

Such a gearing is highly improbable as neither Eskom's or the State's balance sheet could tolerate the associated debt-to-equity and debt-to-revenue ratios. In addition, debt service costs would be well beyond the means of the state.

National Treasury and the DoE must finally come clean on its costing and financing assumptions. Only with this information will the South African people be able to make a rational assessment of procuring additional nuclear capacity.

Issued by Gordon Mackay, DA Shadow Minister of Energy, 2 December 2016