Lynley Donnelly Correspondent
While questions swirl around the progress of South Africa’s nuclear plans, Russia’s state nuclear agency Rosatom is losing no time in selling the atomic dream to other African countries. Last week the company signed project-development agreements with the Nigerian government for the construction and operation of a nuclear power plant and research centre housing a multi-purpose research reactor.
Nigeria has extensive oil and gas reserves, but suffers from chronic electricity shortages. Media reports suggest the deal could cost about $20 billion, but Rosatom said the costs have yet to be determined. The agreements were signed in order to adopt the appropriate approach and establish the project’s implementation details, a Rosatum official said.
“Cost estimations and project specifications will be evaluated in accordance to this agreement,” the official said. In Egypt, plans for the construction of a nuclear plant at El Dabaa are at an advanced stage. The government has reportedly signed a $25 billion loan with Rosatom, which has yet to begin construction. South Africa’s nuclear ambitions have raised questions about affordability and the need for added nuclear power, given poor economic growth and low electricity demand. It remains to be seen whether there are similar misgivings in Nigeria’s case. The country’s fiscal balances are very susceptible to oil price and production shocks so affordability might be a major concern, according to Cobus de Hart, Nigerian analyst at NKC African Economics.
On Wednesday, credit ratings agency Moody’s downgraded Nigeria’s sovereign credit rating further. It was already junk, or sub-investment grade, and its rating was cut from B1 to B2, in part because of the government’s unsuccessful attempts to address the structural weaknesses that leave it exposed to oil-price shocks. Whether Nigeria could afford a nuclear deal would ultimately depend on the terms of the agreement and other factors such as repayment time frames, De Hart said. Nigeria’s current power plants are operating below capacity, maintenance is poor and there are frequent disruptions to gas flow, he said, and a proposed nuclear deal might signal that the country wants to diversify its energy mix. Nigerian authorities are on a privatisation drive and are trying to sell 10 natural gas-fired power plants, he said.
“However, Abuja has struggled to sell these plants due to chronic natural gas shortages, ascribed to sabotage attacks to pipelines and the fact that producers often prefer to export their natural gas rather than supplying it to domestic power plants as the former option is often more profitable.” The Nigerian Atomic Energy Agency did not respond to a request for comment. But environmentalists are asking why Nigeria is considering nuclear power.
“Nuclear energy always comes with the risk of something going horribly wrong, (and) human error combined with very complicated technology can lead to disasters on a massive scale,” said Penny-Jane Cooke, climate and energy campaigner for Greenpeace Africa. Nigeria has huge renewable energy resources available and renewable energy is currently the cheapest and most technically feasible technology available. In South Africa, the government’s nuclear plans face continued opposition, but the newly appointed Minister of Energy, David Mahlobo, remains committed to plans to expand nuclear power.
City Press reported that he is pushing his department to finalise a revised integrated resource plan (IRP) amid fears they may attempt to artificially boost the case for nuclear procurement. But treasury officials and the Minister of Finance, Malusi Gigaba, have stated that South Africa cannot afford nuclear power. Nomvula Khalo, media liaison for the Ministry of Energy, said it is “not aware of any attempt to manipulate the document when the right to determine policy interventions is being exercised”. The need to complete the IRP is driven by the need for policy certainty, which is necessary to support investor confidence, she said. Both Gigaba and Mahlobo have stressed the issues of pace and affordability, she said. Michael Sachs, the deputy-director general of the budget office, told Parliament’s standing committee on finance last week that “not only can the budget not afford it, but the country cannot afford it.”
Work done in 2015 by the treasury indicated that the proposed 9,6 gigawatt nuclear programme would be imprudent until the national debt had stabilised. The treasury found it “would have significant implications for national income, the total debt burden the balance of payments for taxpayers and electricity consumers who will bear the full cost of the programme”. — M&G.