Russia’s government is ready to help South Africa fund new nuclear plants, estimated to cost as much as $100 billion, if state-owned Rosatom Corp. is awarded the construction contracts, a company official said.
Moscow-based Rosatom has suggested several funding models, including helping South Africa secure a Russian loan, Viktor Polikarpov, regional vice president for sub-Saharan Africa, said in an interview in Cape Town on Thursday. The loan duration might be 20 years and South Africa would only start repayment when the first plant starts operating, he said.
“The interest rate the government is offering is not very high, it’s really lucrative,” Polikarpov said. “We won’t get this interest rate anywhere, at any bank.”
South Africa plans to add 9,600 megawatts of nuclear power to the national grid and wants the first reactors to be operational by 2023, a target Polikarpov says is attainable. While the Department of Energy wants to award the contracts by the end of March next year, the National Treasury says it still needs to establish whether they are affordable.
While Rosatom would consider building, owning and operating plants in South Africa, as it has done in Turkey, such contracts would be more complex, Polikarpov said.
“The question will be how can we secure a power-purchase agreement,” he said. “This model is possible but maybe not so viable at this time.”
The new reactors could cost as much as $100 billion over 15 years, according to Des Muller, head of Johannesburg-based building company Group Five Ltd.’s nuclear construction division. That’s more than five times what state-owned electricity utility Eskom Holdings SOC Ltd. is spending on two coal-fired plants that will generate a similar amount of power.
The South African Department of Energy’s 2013 master-plan, rejected by the government, suggested deferring a decision on building atomic power facilities until at least 2025, and scrapping the idea if the cost exceeded $6,500 per kilowatt of capacity. Countries such as Pakistan, Turkey and Belarus were paying $4,200 per installed kilowatt, and India, China and South Korea $2,500, the department said in a statement Tuesday.
“We can target what the South African government is expecting,” Polikarpov said. “The final cost of the build will be determined by the final contracts which are to be signed with the preferred bidder. We say that we are still able to compete.”
Areva SA, EDF SA, Toshiba Corp.’s Westinghouse Electric Corp., China Guangdong Nuclear Power Holding Corp. and Korea Electric Power Corp. have also shown interest in bidding to build the plants in South Africa.
Rosatom is building nine reactors in Russia and 29 elsewhere. It controls the entire process from uranium purchase and fuel fabrication to design, construction and commissioning of plants, helping contain costs, according to Polikarpov.
“We are generating a lot of cash,” he said. “Our revenue is $16 billion a year and our revenue from overseas contracts is $5 billion, which we can invest into new build.”