Radioactive corruption?

With South Africa’s unflattering reputation for looting state coffers, and the divisive nature of nuclear as an energy source, news that the country is considering a R400bn nuclear procurement has raised concerns.

Minister of electricity & energy Kgosientsho Ramokgopa said this month that the state aims to get approval from the National Treasury to start the process of building a 2,500MW nuclear power plant. Ramokgopa expressed hope that by the end of August he would be in a position to offer the how, when and where of the proposed plant.

But there are fears related to the procurement process, as expressed by Songezo Zibi, leader of Rise Mzansi and chair of the standing committee on public accounts (Scopa); Kevin Mileham, the DA’s energy spokesperson; and Dhesigen Naidoo, senior research associate for climate at the Institute for Security Studies (ISS) and a member of the Presidential Climate Committee.

For Zibi, one way of ensuring proper accountability and transparency is to make sure the process is accessible to the public from the beginning: that his committee simplifies the language used and explains clearly how public funds are being spent.

 “One of the things I would like Scopa to do enthusiastically is provide more accessible information to the public, because the real consequence of [misusing or theft of public funds] is not just legal, it is the political consequence for those that may go off the rails with regards to their commitments to the people and how public money is used,” Zibi tells the FM.

“This means we [must] simplify how we communicate. Even how we construct the narrative. The public has to understand what is being spoken about, where it comes from, why it is important and most importantly, what they can do about it.”

It’s about getting to the point, he adds, “where people realise that this is not just what Scopa does, but what we all do as a result of the information we get from Scopa”.

The dynamics of Scopa have changed under the government of national unity. Whereas the ANC previously had a decisive majority in all parliamentary committees — including Scopa — that’s no longer the case. With just 40% in parliament, the ANC can’t rely on simple numbers to get its way. If it were to try to neutralise the committee, it would have to co-operate with the DA, and vice versa. It means, says Zibi, that there’s a strong possibility of Scopa working more effectively — and oversight committees in general working better in executing their mandates.

While acknowledging that parties could, in theory, collaborate in their own interests rather than the public good, Zibi says “on the balance” such narrow political interests are unlikely to align.

The thing about failed nuclear procurement under former president Jacob Zuma “was not so much that the country was procuring nuclear”, says Zibi. “It was more about that the country was buying 9.6GW it could not afford. A lot of the affordability arguments had to do with the size and the fact that these things have cost overruns and we cannot guarantee that whatever they said would be R1-trillion would not end up [being] R4-trillion.”

Mileham raises a related concern. While stressing that his party is not antinuclear, he calls for the department, Eskom and parliament to learn from past examples of state procurement deals in which budgets were overrun — and money was stolen. 

For that reason, he warns against rushing the process. While the country does need to consider nuclear from a long-term perspective, this must be done in terms of the rules that the government has in place, he says. And it must be done in accordance with safety guidelines drafted internationally and managed locally. “We must do all these things before we can proceed with a nuclear procurement deal.”

In particular, Mileham urges the public to question the motives of those who are pushing hard for nuclear — those who see it as “a panacea” for South Africa’s energy crisis. The answer may be that they see “the opportunity for extraction and rent-seeking”, he says. “This is probably going to be South Africa’s biggest procurement project ever. We are looking somewhere in the region of R400bn-plus. It certainly creates opportunities for tenderpreneurs to get their foot in the door.”

Which is why Mileham insists parliament needs to ensure effective oversight. It must call for the department of energy & electricity to provide a detailed energy road map — an updated integrated resource plan (IRP). “It must identify both the need and the proposed generational mix that will meet that need.”

He refers in particular to the 2019 IRP, which called for the plans to procure 2,500MW of nuclear power to be implemented at a pace and scale the country can afford. “Which immediately suggests it should be a phased project. You shouldn’t just go out and buy 2,500MW. It means we might be buying 500MW at a time, or whatever the mix might be. We cannot say ‘pace and scale’ [and] talk about one hit.”

Naidoo, meanwhile, acknowledges that the “pace and scale” could be contentious. He believes there are two distinct camps on the issue. One wants to accelerate the move away from fossil fuels to take advantage of global and local energy transition resource partnerships. In addition to better air quality and a healthier environment, this would reduce trade risks as green trade rules and mechanisms become the global norm.

This camp further recognises as a high priority the security risks associated with climate change — what the ISS calls a “pan-African threat multiplier”.

The other camp, supporting an extended transition timetable, is headed by the fossil fuel fraternity. Its position is underscored by the potential collateral damage to people employed in and companies servicing the coal value chain.

Sometimes it is not that somebody took the money. The controls were fine but the outcome was poor because you did not think about this properly from the onset

—  Songezo Zibi

Still, however long the move to energy security takes, it’s important that the authorities are transparent about the cost so that South Africans can be assured it is affordable. For this reason, Mileham believes the country should be kept up to date on the costing and any changes to ensure such a project.

“We need to be brought updated costs from reputable suppliers and then we need to track that expenditure, because one of the reasons these other projects ran away in terms of corruption and cost overrun is that there was not efficient monitoring of expenditure. That falls on the department, on Eskom and on parliament,” says Mileham.

Zibi meanwhile believes graft is not the only problem to worry about. Poor leadership and bad strategic thinking are other possible drains on the fiscus. As he explains it, there are many instances where no money was stolen but the expenditure wasn’t well thought-out. It speaks to poor leadership — and this costs the public money.

“We need to find instruments that will help us review what was intended and the quality of the outcome. Sometimes it is not that somebody took the money. The controls were fine but the outcome was poor because you did not think about this properly from the outset,” Zibi says.

“I want us to develop mechanisms to identify those instances where you end up with a white elephant so that you can use it [as an example] to evaluate other areas where the same thing might happen.”

Naidoo agrees that making sure the deal can be scrutinised is just one aspect of what would be required. The numbers need to make business sense too.

“In the energy build-and-operate game, numbers matter. Economies of scale are key to lower costs throughout the life cycle of nuclear fuel, including nuclear waste management. This is also true for the capacity required to operate and maintain the plants,” he says.

“During the course of the [pebble bed modular reactor] project, South Africa developed a critical mass of scientific capacity that it eventually lost by failing to industrialise … An additional 2,500MW plant on its own will not achieve these economies of scale.”