Russians Seen Ahead in Run-Up to South African Nuclear Bid

Russia’s Rosatom Corp. is an early frontrunner to participate in South Africa’s proposed nuclear program after the sides announced a partnership, said Anton Eberhard, an energy specialist at the University of Cape Town.

“Russians are ahead in the pack, but South Africa would still need to pursue a competitive bidding process,” Eberhard, a professor at the university’s Graduate School of Business, said in an e-mailed response to questions today. There is a “big difference between a general framework agreement and actual contracts to build, finance and purchase power,” he said.

State-owned Rosatom and South Africa’s Department of Energy said yesterday their intergovernmental agreement laid the foundation for as many as eight Russian VVER reactors that used pressurized water.

South Africa’s integrated resources plan envisions 9,600 megawatts of nuclear energy being added to the grid to help reduce reliance on coal. Eskom Holdings SOC Ltd., the utility that provides 95 percent of power to the continent’s second-biggest economy, is struggling to meet demand.

“These types of agreements are normal around the world when it comes procurement for nuclear,” Xolisa Mabhongo, the South Africa Nuclear Energy Corp.’s group executive for corporate services, said in an e-mailed response to questions. “At this stage, therefore, there is no top company identified.”

Interest Expressions

The National Treasury said in February 2013 that a 300 billion-rand ($27 billion) nuclear program was in the final stages of study.

Areva SA, EDF SA, Toshiba Corp.’s Westinghouse Electric Corp., China Guangdong Nuclear Power Holding Corp. and Korea Electric Power Corp. have expressed interest in building the plants. South Africa also has a draft nuclear cooperation pact with China.

“We foresee that similar agreements will be signed with other nuclear vendor countries,” Mabhongo said, referring to the Russian agreement. “Government committees have been meeting over a long time now looking at different aspects such as costs, environmental impact, stakeholder relations, etc. This will all be taken into account before final decisions.”

Westinghouse said the pact is comparable to others it has signed. “The Russians did not sign a procurement deal with Eskom,” the company said in an e-mailed response to questions. “It was more of an intergovernmental agreement to cooperate in the vaguest terms. Westinghouse has signed similar agreements but with actual South African companies.”

‘Dead End’

The agreement raised objections by Greenpeace over how South Africa proposes to meet electricity demand.

“Nuclear power is nothing more than a dead-end: it takes far too long to deliver and will cost much more than South Africans can afford,” the environmental group said in a statement. “Renewable energy can be built quickly, it is clean, much cheaper than nuclear and it will create far more, long-lasting jobs.”

The Democratic Alliance, the main opposition party to the ruling African National Congress, called for an urgent meeting of the parliamentary energy committee to address the agreement.

“No official communication has been made from the Presidency, the Department of Energy or the Department of International Relations and Cooperation on the agreement -- fuelling speculation as to the contents of the agreement,” Lance Greyling, the party’s shadow minister of energy, said in a statement.

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