MINISTRY OF ENERGY

REPUBLIC OF SOUTH AFRICA

National Assembly: 146

Mr G Mackay (DA) to ask the Minister of Energy:

With reference to her recent comments during her Budget Vote speech debate that her department will continue with the nuclear new build programme, (a) when will she make pronouncements regarding the expected costs of this project and (b) what steps does the Government intend to take to finance this project?        NO2355E

Reply:

(a)  The Department of Energy has commissioned a study aiming at updating the cost of nuclear power to gain an indication of cost of the nuclear new build programme. In addition the Department of Energy also commissioned the Financing Options and Solutions.  The purpose of this study was to determine the financing cost and tariff impact on the various power plants ownership models. Although these costs and financing studies provide some benchmark on the feasibility of the nuclear programme, the true test of affordability for nuclear power will be in the price and financial offering provided by technology suppliers (nuclear vendor countries) during the procurement process.  This will be a true test of affordability of nuclear power, and hence it is crucial to start the actual nuclear procurement as soon as possible.

The exact mechanism of financing is dependent on the market response. The market can only be tested during the procurement process. Therefore the Department of Energy will commence the procurement process in the second quarter of this year (in July 2015). The procurement process will be completed by end of this year to select a Strategic Partner or Strategic Partners.  Therefore the expected cost of the project will be announced once procurement process has been finalized.

(b)  The Department of Energy has taken several steps to investigate financing of the nuclear programme working with other departments including National Treasury, Department of Public Enterprises, Department of Mineral Resources, Department of Trade and Industry, Department of Science and Technology as well as Eskom in as part of Energy Security Cabinet Subcommittee structure. Through this process Department commissioned independent Consultants to conduct the following studies:

i. Cost of Nuclear Power

ii. Owner Operator Financing structure

iii. Financing Options, Models and Solutions

These studies have indicated that the programme is financeable. However, it is crucial to start the procurement process and call for the bids in order to receive price and financing offerings from nuclear vendors.

Issued by Parliament, June 11 2015